IMPACT OF FII ON STOCK MARKET

SUBMITTED BY-
ACKNOWLEDGEMENT
I express my sinere !r"#i#$%e #& my '"$(#y !$i%e MY Le#$rer in ))
* '&r +er ",(e !$i%"ne* &n#in$&$s s$pp&r# "n% &&per"#i&n #+r&$!+&$#
my pr&-e#* .i#+&$# .+i+ #+e presen# .&r/ .&$(% n&# +"0e ,een
p&ssi,(e1
I .&$(% "(s& (i/e #& #+"n/ #+e en#ire #e"m ))))))))))))'&r #+e &ns#"n#
s$pp&r# "n% +e(p in #+e s$ess'$( &mp(e#i&n &' my pr&-e#1
Si!n"#$re
4
TABLE OF CONTENTS
S$,-e#
C+"p#er 2 Exe$#i0e S$mm"ry 3
C+"p#er 4
Rese"r+ Me#+&%&(&!y555555
Prim"ry O,-e#i0e6s7
Rese"r+ Desi!n
S"mp(e Desi!n
S&pe &' #+e S#$%y
Limi#"#i&ns
8
C+"p#er 9 Cri#i"( Re0ie. &' Li#er"#$re 2:
C+"p#er ;
C&$n#ry An"(ysis
;<
C+"p#er =
D"#" C&((e#i&n
Prim"ry D"#"
Se&n%"ry D"#"
==
C+"p#er 3 Fin%in!s > An"(ysis =3
C+"p#er 8 Re&mmen%"#i&ns =:
C+"p#er : Bi,(i&!r"p+y =?
C+"p#er ? Annex$re
T",(es
Gr"p+s
3<
C+"p#er 2<
C&n($si&n
3:
C+"p#er 22
ANNE@TURE
82
5
E@ECUTIAE SUMMARY
T+is rese"r+ .&r/ - +"s ,een %&ne ,y me $n%er #+e +$m,(e !$i%"ne &' my
In%$s#ry !$i%e))))))))) > '"$(#y !$i%e )))))))) &n #+e #&pi BIMPACT OF
FOREIGN INSTITUTIONAL INAESTMENT ON INDIAN STOCK MARKETC1

T+is rese"r+ .&r/ s#"r#s .i#+ #+e !ener"( in#r&%$#i&n &' #+e FII in In%i" "'#er
LPG6Li,er"(iD"#i&n *Pri0"#iD"#i&n * G(&,"(iD"#i&n7 in 2??2 1 R$(es > re!$("#i&n
#+r&$!+ .+i+ FII en#er in#& In%i"n m"r/e# > 'in"((y .+"# imp"# i# (e"0es &n &$r
sensex * "(s& pr&0i%es #+e "%0"n#"!e > %is"%0"n#"!e &' FII in In%i" 1
F&rei!n Ins#i#$#i&n"( In0es#&rs "re in (&0e .i#+ In%i"1 T+ey "re ,e##in! ,i! #ime &n
D"("( s#ree#1 T+e "m&$n# &' in0es#men# #+"# +"s p&$re% in#& In%i" in ("s# 9 Ye"rs is
m&re #+"n #&#"( in0es#men# #+ey m"%e in #+e &$n#ry sine In%i" !&# In%epen%ene.
T+e #&#"( in0es#men# #+"# F&rei!n In0es#&rs 6FIIs7 +"0e m"%e in In%i" $rren#(y
s#"n%s "# 44<*<<< r&re r$pees &r E=4 Bi((i&n1 T+ese 'i!$res .ere "s &' Apri( 4<<81 In
'irs# ; m&n#+s &' #+is ye"r i#se(' FIIs +"0e p$# in "r&$n% 2=<<< r&res One &' #+e
re"s&n .+i+ p$((s #+e Sensex #& " (i'e #ime +i!+ 2=<<<*in F$(y 4<<8 is n&ne &#+er
#+"n FIIs &n(y
Wi#+ #+e $se &' SPSS* 'in"((y I 'in% #+"# p&si#i0e re("#i&ns+ip exis# ,e#.een FII >
SENSE@ 'i!$re * "s R
4
6 &e''iien# &' %e#ermin"#i&n7 &mes &$# in p($s p&in#s
6
RESEARCG METGODOLOGY
PRIMARY OBFECTIAE
Before starting a project , we should keep in mind the clear objective of the project
because in the absence of the objective one cant reach the conclusion or the end result of
the project . Research objective answer the uestion !"h# this stud# is being conducted
$or ever# problem there is a research. %s all the research is based on some objective, m#
research has also some objectives which are as follows&
'o ascertain the growth prospect in BR() countries b# doing in*depth and
detailed anal#sis of the economic situations in these countries
'o identif#ing ke# opportunities for growth in different industr# sectors at the
economies of Bra+il Russia, (ndia and )hina,

,
RESEARCG DESIGN
Rese"r+ Desi!n is " p("n '&r se(e#in! #+e s&$res "n% #ypes &' in'&rm"#i&n $se% #&
"ns.er rese"r+ H$es#i&ns1 A 'r"me.&r/ '&r spei'yin! #+e re("#i&ns+ips "m&n! #+e
s#$%y 0"ri",(es1 Rese"r+ Desi!n is " ,($eprin# #+"# &$#(ines e"+ pr&e%$re 'r&m
#+e +yp&#+esis #& #+e "n"(ysis1
Rese"r+ Desi!n is #+e &nep#$"( s#r$#$re .i#+in .+i+ rese"r+ is &n%$#e%1 I#
&ns#i#$#es #+e ,($eprin# '&r &((e#i&n* me"s$remen#* > "n"(ysis &' #+e %"#"1 T+e
%esi!n $se% '&r "rryin! &$# #+is rese"r+ is E@PLORATORY > E@PERIENCED
,"se%1
T+is #ype &' rese"r+ is #en#"#i0e "n% i# is H$"(i#"#i0e in n"#$re1 Exp(&r"#i&n is
p"r#i$("r(y $se'$( .+en rese"r+ers ("/ " (e"r i%e" &' #+e pr&,(ems1
T+e "ppr&"+ $se% in #+e s#$%y ."s ,&#+ H$"(i#"#i0e "s .e(( "s H$"n#i#"#i0e "s &n(y
#+e&re#i"( "spe#s "re n&# &nsi%ere% ,$# #+eir pr"#i"(i#y is "(s& ,een &,ser0e%1

-
SCOPE OF TGE STUDY
Emer!in! E&n&mi P&.ers
(ncreasing share of global ./0
1igher growth rate of ./0 per capita
Burgeoning energ# consumption
.rowing $oreign /irect (nvestment
2
LIMITATION
C+"((en!es '"in! BRIC e&n&mies
0roblems of state functioning
(neffective law and order
Rampant corruption
1igh levels of ineualit# and povert#
.rowing 0ains& Bra+il, Russia, (ndia and )hina face economic hurdles
Bra+il, Russia, (ndia and )hina, collectivel# known as BR()s, are the current bu++ on
ever#one3s global econom# radio as a result of their incredible economic growth. 'his
growth has stemmed from compounding changes in each countr#& !%ll these things don3t
just happen magicall#4the# happen for a reason, sa#s 'e5as %67 $inance 0rofessor
%rvind 7ahajan.
7ahajan, 8amar 9avings 0rofessor at 7a#s, is co*author of !% $uture .lobal :conom#
to be Built b# BR()s, published as the lead article in the 7a# ;<<, issue of .lobal
$inance =ournal.
Researchers have linked BR()s as a potential team with )hina and (ndia acting as
dominant global suppliers of goods and services, and Bra+il and Russia as their
commodit# and raw material suppliers. %ll four of these countries have e5perienced
growth because of their advancement to global capitalism, which has been propelled b#
programs such as changing political s#stems, foreign investment and education. But
BR() countries still face major hurdles that ma# slow their rising economies.
Bra+il3s economic position has improved because the demand and prices of its e5ports
have risen, but primar# surplus associated with higher ta5es can lead to higher public
debt. 'he (>99, Bra+il3s social securit# administration, is pressuring the central
government for increasing retirement e5penditures while investment e5penditures are
declining as a fraction of its gross domestic product, or ./0.
?<
1igh oil prices and a cheap ruble are the sources of Russia3s recent economic success. (ts
foreign debt has declined from 2< percent of ./0 to onl# @? percent and foreign reserves
have leaped from A?; billion to A?-< billion within a decade. Russia has abundant natural
resources, but still faces problems because the countr# lacks strong legal, financial and
democratic institutions.
% democraticall# elected government runs (ndia, but its democrac# has created obstacles
of another kind. !0rogress can3t be as swift because of democrac#. /emocrac# can be
bad news and good newsBit3s bad because it makes ever#thing move slower, but it3s
good because if people aren3t happ#, the# can complain, 7ahajan sa#s. :ven with
slower progress, (ndia3s growth rate has e5ploded4it averaged a 6 percent increase over
the last ;5 #ears. (f that growth rate continues, (ndia3s econom# Cin terms of purchasing
powerD will eual that of the E.9. b# ;<5<.
)hina has the most potential of the BR() countries to become the ne5t world leader.
7ahajan sa#s researchers joke that !)hina is the production center of the world and (ndia
is the huge back office of the world. )hina is the biggest countr# b# area, and with ?.@
billion people, it is also the most populous nation in the world. >eedless to sa#, )hina3s
overpopulation results in cheap labor and concentrated areas of povert#.
(n an effort to control overpopulation, each famil# in )hina was allowed to have onl# one
child. 'his has helped lower the population, but in the future, there ma# not be enough of
the working*age population left to run )hina3s huge rising econom#. 'he lack of
regulations is also causing major problems. 0ollution is so e5treme that citi+ens are
developing serious health problems from polluting agents. %nd as more people in )hina
become educated and wealth#, the# will demand more political rights.
(n order for the E.9. to remain active in the global market alongside BR() countries,
7ahajan suggests that the E.9. must continue in the path of freel# competitive and more
efficient markets, pursuing policies encouraging innovation and rigorous education with
new industr#*specific strategies. !(f we do things right, we can have the same strengths,
he sa#s.
??
9tudents at 7a#s Business 9chool can e5pect more opportunities for stud# abroad
e5periences, including those in BR() countries. 7B% students are stud#ing in (ndia this
#ear and other students will have the opportunit# to stud# at the Eniversit# of Beijing.
7a#s facult# were also involved in starting a business school in 9t. 0etersburg, Russia.
7ahajan, along with other 7a#s professors, plans to continue challenging 'e5as %67
students in their knowledge and understanding of the global econom#, especiall#
concerning BR() countries. !'he E.9. is on the first page of ever# countr#3s newspaper,
7ahajan sa#s. !"e know so little about these countries, and the# know so much about
us. "e need to understand where people are coming from to know where the# are going
?;
CRITICAL REAIEW OF LITERATURE
BR() or BR()s are terms used in economics to refer to the combination of Bra+il,
Russia, (ndia, and )hina. 'he fortunes of the world econom# over the ne5t decade
depend on what happens in the BR() countries& Bra+il, Russia, (ndia and )hina. %ll with
large populations and hungr# for growth, the# are alread# reshaping global commerce
and the# have the potential to change it even more. (n this issue of T+e B"n/er we focus
on all four. "ith international banks engrossed b# )hina, our cover stor# looks at the best
banks to bu# and provides a 'op 5< of )hinese banks.
'he Bric countries have large, #oung populations to drive this growth, with man#
concentrated in major cities, wealth generators that these are.'he growing prosperit# of
the Bric economies will be largel# down to a rapidl# emergent and e5panding middle
class. (mproving domestic consumption should complement e5port and investment
strengths, and provide more long*term growth.
'he numbers of Bric residents whose incomes e5ceed A@,<<< Cconsistent with entr# into
the middle class in the emerging markets regionD should almost double between ;<<6 and
;<<2.
B# ;<?5, more than -<< million people across the four economies should have crossed
this threshold 4 e5ceeding the current total population of the E9, "estern :urope and
=apan combined. 'his should affect man# industr# sectors, including mobile*phone
operators, computers, automobiles, etc. Rising incomes will also lead to increased
numbers of high*net*worth individuals.
%nother factor supporting these markets is corporate profitabilit#. )orporate profits in
Bric companies has been consistentl# positive over the past decade, driven largel# b#
corporate restructuring, reduced levels of borrowing and improvements in the ualit# of
corporate governance.
?@
(n future, provided the recent problems in the credit market do not affect global growth in
a significant manner, we believe that Bra+il should continue to perform well despite the
short*term volatilit#. Faluations are not stretched, and diversification has been increasing
with new companies coming to the market.
7eanwhile, (ndiaGs stock market has reached ver# high levels. "e e5pect (ndian ./0
and corporate earnings growth to slow as we enter ;<<-. "e will be watching for fiscal
and monetar# polic# initiatives to keep inflation under control. %lthough positivel#
positioned for the long term, the (ndian market is likel# to remain volatile in the short
term.
)hinese euit# valuations have moved up in recent months, but we believe the higher
valuations are justified given the better earnings*growth outlook. 'he currenc#
appreciation, mergers and acuisitions, and implementation of management incentive
plans, as well as a ta5 cut in ;<<-, should support )hinese euities. % negative is )hinaGs
huge and rising trade surplus with the E9 and :urope.
$inall#, Russian euities suffered in the %ugust marketsG turmoil, and with no strong
performance earlier this #ear to cushion the blow, man# Russian stocks have been left on
modest valuations. $or e5ample, .a+prom and 8ukoil are on relativel# low valuations,
even though both companies have a longer estimated life of oil resources than their
Bra+ilian counterpart 0etrobras.'he oil price, which is a ke# driver of Russian euities, is
unlikel# just to collapse, although for some stocks, the market has been trading as if this
were the case.
?4
$orecasts that the nominal ./0 of the BR()s will virtuall# treble between ;<<6*;<?; to
E9A?5.4trn, with combined e5ports of E9A@.6trn boosting domestic growth and creating
a whole new generation of consumers. %t a time when growth is slowing in :urope and
the E9, the BR()s are a uniuel# compelling growth opportunit# for companies able to
penetrate these largel# virgin markets. The economies of China and India, whose
recent growth has been triggered by investment and exports of manufactured goods,
are vastly different from resource-fuelled Russia and, to a lesser extent, Brazil
Conse!uently, any strategy to exploit the growth of the BRICs must ta"e into
account the uni!ue ris"s faced in each - for example, the dangers to oil price stability
for Russia, and the immaturity of financial mar"ets and inflationary pressures for
China
B r"Di( * R $ssi" * I n%i" * "n% C +in" in 4<=<1S&me Pr&-e#i&n ",&$# BRIC &$n#ries
(n less than 4< #ears, the BR()s economies together could be larger than the .6 in E9A
terms .B# ;<;5 the# could account for over half the si+e of the .6 * the# are currentl#
worth less than ?5H. If the current .6, onl# the E9 and =apan ma# be among the si5
largest economies in E9A terms in ;<5<
'he largest economies in the world Cb# ./0D ma# no longer be the richest Cb# income
per capitaD, making strategic choices for firms more comple5.
%s toda#3s advanced economies become a shrinking part of the world econom#, the
accompan#ing shifts in spending could provide significant opportunities for global
companies. Being invested in and involved in the right marketsBparticularl# the right
emerging marketsBma# become an increasingl# important strategic choice
Bra+il, Russia, (ndia and )hina as economies that would together overtake the economies
of the si5 richest countries in the world b# ;<4<. (ndia and )hina are investing in higher
education and going for !intellectual capital, while Russia and Bra+il depend too much
?5
on the current commodit# price boom and are not making the necessar# investments in
infrastructure and human capital.
Russia currentl# has a bad reputation for obvious ver# serious political reasons, and
Bra+il tends to get lost in the meanders of its democratic politics and corruption scandals.
1owever, in m# view, the article goes a bit too rapidl# over a few issues. 9o, here a few
remarks, if ( ma#&
%ccording to the authors, )hina and (ndia !are competing with the west for
intellectual capital by seeking to build top-notch universities, investing in high,
value-added and technologically intensive industries, and utilising successful
diasporas to generate entrepreneurial activity. Jes, but (ndia has got its basic
education wrong. (t might have a few Brahmin*like intellectuals involved in rich*
econom# standard services and high*tech activities, but it will not have resolved
its problems of mass povert# and thus long*term political stabilit# and immense
potential growth prospects. %ccording to m# Pocket World in igures, !""#
$dition edited b# %he $conomist, adult literac# in )hina is 2<.2H, Bra+il --.6H,
Russia 22,4H and (ndiaK. a mere 6?H. "hat do foreign investors want to do in a
countr# with 4<H illiterate peopleL 'here is not much evidence either that much
is being done in (ndia to tackle this problem.
'he article also sa#s that in Russia and Bra+il, the infrastructures of both
countries remain third world. (f )hina is investing massivel# in infrastructure,
there is no evidence of a real drive to do something about infrastructure in (ndia at
all. %nd if Bra+il3s and Russia3s infrastructure is !third world, so what is (ndia3sL
?6
FACTORS LEAD TO GROWTH IN BRIC
countries
Globalization an !ro"t#**"orldwide demand for energ# and other commodities, the
outsourcing phenomenon, and widespread access to global capital have helped fuel the
BR() countriesG growth. (ndia dominates service outsourcing, Bra+il and Russia have
vast energ# and mineral resources, and )hina has developed into the worldGs
manufacturing plant. (ndiaGs econom# is growing at -.5H a #ear, and )hinaGs at more
than ?<.5H, and a combined ./0 of BR() countries is E9A5.; trillion in ;<<6.
Hu!e $o$ulations% &uture bu'ers**'ogether, the BR() countries represent 4;H of the
worldGs population, 'hese leading emerging and rapidl#*growing economies represented
a total market of ;., billion people.'hat number represents enormous untapped future
purchasing power. (t gives BR() countries the potential for even more rapid e5pansion if
their economies continue
to develop and the benefits reach a greater percentage of their populations.
Reuce reliance on &orei!n ebtB.rowth has helped BR() countries pa# down loans
incurred during previous economic crises, though the potential for default on that debt
could still present an investment risk.
Riin! t#e roller coaster
/espite the recent success of these regions**or because of it**mone# managers are
divided on how long the rise of emerging markets can continue without a significant
correction. Because commodities are so important to the BR() economies, an# slowdown
in worldwide growth and therefore demand could have a significant impact on
investments there. Ither risks e5ist as well. %ll four countries have e5perienced political
?,
instabilit#, currenc# fluctuations, andMor economic problems. (nvestors who were affected
wonGt soon forget RussiaGs ?22- economic crisis or Bra+ilGs bouts with rampant inflation
in the late ?2-<s and earl# ?22<s. %lso, economic growth rates donGt necessaril# translate
directl# into stock market returnsN until the last #ear or so, )hinaGs stock market suffered
serious multi#ear losses.
BRIC in(estin! an be'on
Jou have man# wa#s to take advantage of the projected growth in these regions. Ine of
the most popular is inde5 mutual funds or e5change*traded funds C:'$sD, which ma# be
based on an inde5 for an individual countr# or one thatGs BR()*wide. Jou might also
want to e5plore be#ond the BR()s. Ither emerging markets might have great growth
potential but might not #et have attracted as much investor attention. /iversified
emerging*markets funds often have a large e5posure to the BR() countries. 'he number
of BR()*specific companies
is relativel# limitedN including other emerging markets as well as the BR()s gives a fund
manager an e5panded universe of securities from which to select. (f #ouGre interested in
individual stocks, some of the largest BR() firms are listed on E.9. e5changes via
%merican /epositar# Receipts C%/RsD. 'he historical volatilit# of emerging markets
means #ou should take a long*term view, and be prepared for the possibilit# of ups and
downs along the wa#. Jour financial professional can help #ou decide whether emerging
markets are appropriate for part of #our portfolio, and suggest how to balance their
potential rewards and risks.
?-
COUNTRY ANALYSIS
BRAIIL
Bra+il became an independent nation in ?-;; and a republic in ?--2. B# far the largest
and most populous countr# in 9outh %merica, Bra+il overcame more than half a centur#
of militar# intervention in the governance of the countr# when in ?2-5 the militar#
regime peacefull# ceded power to civilian rulers. Bra+il continues to pursue industrial
and agricultural growth and development of its interior. :5ploiting vast natural resources
and a large labor pool, it is toda# 9outh %mericaGs leading economic power and a
regional leader. 1ighl# uneual income distribution remains a pressing problem.
Population: ?2<,<?<,64,
Bra+il conducted a census in %ugust ;<<<, which reported a population of ?62,,22,?,<N
that figure was about @.@H lower than projections b# the E9 )ensus Bureau, and is close
to the implied under enumeration of 4.6H for the ?22? censusN estimates for this countr#
e5plicitl# take into account the effects of e5cess mortalit# due to %(/9N this can result in
lower life e5pectanc#, higher infant mortalit# and death rates, lower population and
growth rates, and changes in the distribution of population b# age and se5 than would
otherwise be e5pected .
Age structure: "-&' years( ;5.@H Cmale ;4,554,;54Mfemale ;@,6?@,<;,D
&)-*' years( 6-.4H Cmale 64,4@,,?4<Mfemale 65,5;@,44,D
*) years and over( 6.@H Cmale 4,--<,56;Mfemale ,,<<;,;?,D
Median age: total( ;-.6 #ears
male( ;,.2 #ears
female( ;2.4 #ears
Population growth rate: ?.<<-H
Birth rate :6.@ birthsM?,<<< population.
Death rate: 6.?2 deathsM?,<<< population
?2
Sex ratio: at birth( ?.<5 maleCsDMfemale
under &) years( ?.<4 maleCsDMfemale
&)-*' years( <.2-@ maleCsDMfemale
*) years and over( <.62, maleCsDMfemale
total population( <.2,6 maleCsDMfemale
Life expectancy at birth: total population( ,;.;4 #ears
male( 6-.@ #ears
female( ,6.@- #ears
Nationality: Bra+ilian
Ethnic groups: white 5@.,H, mulatto Cmi5ed white and blackD @-.5H, black 6.;H,
eligions: Roman )atholic CnominalD ,@.6H, 0rotestant ?5.4H, 9piritualist ?.@H,
BantuMvoodoo <.@H, other ?.-H, unspecified <.;H, none ,.4H C;<<< censusD
Languages: 0ortuguese CofficialD, 9panish, :nglish, $rench
Bra+il will remain a strong beneficiar# of high energ# prices in ;<<-, with its ethanol and
chemical industries firing on all c#linders. Bra+il is also strongl# positioned in the world
of rising beef and poultr# prices, general appreciation in agricultural commodities
markets and rising global demand for other natural resources. (t3s regional stronghold in
energ# will be amplified as electricit# demand rises both domesticall# and in
neighbouring countries.
Bra+il is benefiting from benign inflation and strong e5ports. (n addition, declining
interest rates and a current account surplus have combined to kick*start local markets.
Bra+ilGs growth is e5pected to remain strong as homebuilding takes off, retail sales
e5pand and infrastructure improvements gain steam. %ll of this comes as e5ports remain
health# and demand for imports rises.
;<
RUSSIA
$ounded in the ?;th centur#, the 0rincipalit# of 7uscov#, was able to emerge from over
;<< #ears of 7ongol domination C?@th*?5th centuriesD and to graduall# conuer and
absorb surrounding principalities. (n the earl# ?,th centur#, a new Romanov /#nast#
continued this polic# of e5pansion across 9iberia to the 0acific. Ender 0:':R ( Cruled
?6-;*?,;5D, hegemon# was e5tended to the Baltic 9ea and the countr# was renamed the
Russian :mpire. /uring the ?2th centur#, more territorial acuisitions were made in
:urope and %sia. /efeat in the Russo*=apanese "ar of ?2<4*<5 contributed to the
Revolution of ?2<5, which resulted in the formation of a parliament and other reforms.
Repeated devastating defeats of the Russian arm# in "orld "ar ( led to widespread
rioting in the major cities of the Russian :mpire and to the overthrow in ?2?, of the
imperial household. 'he )ommunists under Fladimir 8:>(> sei+ed power soon after
and formed the E99R. 'he brutal rule of (osif 9'%8(> C?2;-*5@D strengthened
)ommunist rule and Russian dominance of the 9oviet Enion at a cost of tens of millions
of lives. 'he 9oviet econom# and societ# stagnated in the following decades until
.eneral 9ecretar# 7ikhail .IRB%)1:F C?2-5*2?D introduced glasnost CopennessD and
perestroika CrestructuringD in an attempt to moderni+e )ommunism, but his initiatives
inadvertentl# released forces that b# /ecember ?22? splintered the E99R into Russia and
?4 other independent republics. 9ince then, Russia has struggled in its efforts to build a
democratic political s#stem and market econom# to replace the social, political, and
economic controls of the )ommunist period. (n tandem with its prudent management of
RussiaLs windfall energ# wealth, which has helped the countr# rebound from the
economic collapse of the ?22<Ls, the Oremlin in recent #ears has overseen a
recentrali+ation of power that has undermined democratic institutions. Russia has
severel# disabled the )hechen rebel movement, although violence still occurs throughout
the >orth )aucasus.
;?
P&p$("#i&nJ ?4?,@,,,,5;
A!e s#r$#$reJ "-&' years( ?4.6H Cmale ?<,56@,56,Mfemale ?<,<;?,@?6D
&)-*' years( ,?.?H Cmale 4-,4?;,6?;Mfemale 5;,<6?,6<4D
*) years and over( ?4.4H Cmale 6,@6<,<@-Mfemale ?@,25-,6?5D
Me%i"n "!eJ total( @-.; #ears
male( @5 #ears
female( 4?.@ #ears
P&p$("#i&n !r&.#+ r"#eJ *<.4-4H
Bir#+ r"#eJ ?<.2; birthsM?,<<< population
De"#+ r"#eJ ?6.<4 deathsM?,<<< population
Sex r"#i&J at birth( ?.<6 maleCsDMfemale
under &) years( ?.<54 maleCsDMfemale
&)-*' years( <.2@ maleCsDMfemale
*) years and over( <.456 maleCsDMfemale
total population( <.-52 maleCsDMfemale
Li'e expe#"ny "# ,ir#+J total population( 65.-, #ears
male( 52.?; #ears
female( ,@.<@ #ears
N"#i&n"(i#yJ Russian
E#+ni !r&$psJ Russian ,2.-H, 'atar @.-H, Ekrainian ;H, Bashkir ?.;H, )huvash
?.?H, other or unspecified ?;.?H
Re(i!i&nsJ Russian Irthodo5 ?5*;<H, 7uslim ?<*?5H, other )hristian ;H C;<<6 est.D
L"n!$"!esJ Russian, man# minorit# languages.
;;
Russia will most likel# be a star performer in ;<<- in the entire :uro*%sian +one. 'his
performance will onl# partiall# depend on high*energ# prices. (nstead of oil and gas 4
which will remain solid performers for Russia 4 the countr# econom# will be driven b#
domestic consumption growth, higher demand for majour commodities and enhanced
political stabilit#. "ith 7arch 0residential elections now looking increasingl# less
uncertain and with 7edvedev*0utin leadership team almost all but assured continuit# into
;<<-*;<?; term, Russian internal economic policies will be focusing on fostering greater
private sector development in ke# high technolog#, R6/, education, health services,
precision instruments, ()' and chemical sectors 4 all sectors with low level of market
power concentration, lack of monopolies and low state interference
Russia faces political risk and depends heavil# on oil and gas prices, but itGs generall#
considered the cheapest of the BR() markets. 7oreover, Russia has better long*term
growth prospects than most other emerging markets, .erhardt sa#s, and should
outperform in the ne5t ?; months.
;@
CGINA
)hina stood as a leading civili+ation, outpacing the rest of the world in the arts and
sciences, but in the ?2th and earl# ;<th centuries, the countr# was beset b# civil unrest,
major famines, militar# defeats, and foreign occupation. %fter "orld "ar ((, the
)ommunists under 7%I Pedong established an autocratic socialist s#stem that, while
ensuring )hinaGs sovereignt#, imposed strict controls over ever#da# life and cost the lives
of tens of millions of people. %fter ?2,-, his successor /:>. Qiaoping and other leaders
focused on market*oriented economic development and b# ;<<< output had uadrupled.
$or much of the population, living standards have improved dramaticall# and the room
for personal choice has e5panded, #et political controls remain tight.
P&p$("#i&nJ ?,@;?,-5?,---
A!e s#r$#$reJ "-&' years( ;<.4H Cmale ?4@,5;,,6@4Mfemale ?;6,6<,,@44D
&)-*' years( ,?.,H Cmale 4-,,<,2,,,<Mfemale 46<,526,@-4D
*) years and over( ,.2H Cmale 42,6-@,-56Mfemale 54,@56,2<<D C;<<, est.D
Me%i"n "!eJ total( @@.; #ears
male( @;., #ears
female( @@., #ears
P&p$("#i&n !r&.#+ r"#eJ <.6<6H
Bir#+ r"#eJ ?@.45 birthsM?,<<< population
De"#+ r"#eJ , deathsM?,<<< population
Sex r"#i&J at birth( ?.?? maleCsDMfemale
under &) years( ?.?@4 maleCsDMfemale
&)-*' years( ?.<5, maleCsDMfemale
*) years and over( <.2?4 maleCsDMfemale
total population( ?.<6 maleCsDMfemale
Li'e expe#"ny "# ,ir#+J total population( ,;.-- #ears
;4
male( ,?.?@ #ears
female( ,4.-; #ears
N"#i&n"(i#yJ )hinese
E#+ni !r&$psJ 1an )hinese 2?.2H, Phuang, E#gur, 1ui, Ji, 'ibetan, 7iao, 7anchu,
7ongol, Bu#i, Oorean, and other nationalities -.?H
Re(i!i&nsJ /aoist C'aoistD, Buddhist, )hristian @H*4H, 7uslim ?H*;H
note( officiall# atheist
L"n!$"!esJ 9tandard )hinese or 7andarin C0utonghua, based on the Beijing dialectD,
Jue C)antoneseD, "u C9hanghaineseD, 7inbei C$u+houD, 7innan C1okkien*'aiwaneseD,
Qiang, .an, 1akka dialects, minorit# languages Csee :thnic groups entr#D
;5
INDIA
%r#an tribes from the northwest infiltrated onto the (ndian subcontinent about ?5<< B.).N
their merger with the earlier /ravidian inhabitants created the classical (ndian culture.
'he 7aur#a :mpire of the 4th and @rd centuries B.). * which reached its +enith under
%91IO% * united much of 9outh %sia. 'he .olden %ge ushered in b# the .upta
d#nast# C4th to 6th centuries %./.D saw a flowering of (ndian science, art, and culture.
%rab incursions starting in the -th centur# and 'urkic in the ?;th were followed b# those
of :uropean traders, beginning in the late ?5th centur#. B# the ?2th centur#, Britain had
assumed political control of virtuall# all (ndian lands. (ndian armed forces in the British
arm# pla#ed a vital role in both "orld "ars. >onviolent resistance to British colonialism
led b# 7ohandas .%>/1( and =awaharlal >:1RE brought independence in ?24,. 'he
subcontinent was divided into the secular state of (ndia and the smaller 7uslim state of
0akistan. % third war between the two countries in ?2,? resulted in :ast 0akistan
becoming the separate nation of Bangladesh. (ndiaGs nuclear weapons testing in ?22-
caused 0akistan to conduct its own tests that same #ear. 'he dispute between the
countries over the state of Oashmir is ongoing, but discussions and confidence*building
measures have led to decreased tensions since ;<<;. /espite impressive gains in
economic investment and output, (ndia faces pressing problems such as significant
overpopulation, environmental degradation, e5tensive povert#, and ethnic and religious
strife.
P&p$("#i&nJ ?,?;2,-66,?54
A!e s#r$#$re J "-&' years( @?.-H Cmale ?--,;<-,?26Mfemale ?,?,@56,<;4D
&)-*' years( 6@.?H Cmale @66,2,,,-;?Mfemale @46,<@4,565D
*) years and over( 5.?H Cmale ;,,;5-,;52Mfemale @<,<@?,;-2D
Me%i"n "!e J total( ;4.- #ears
male( ;4.5 #ears
female( ;5.; #ears
;6
P&p$("#i&n !r&.#+ r"#eJ ?.6<6H
Bir#+ r"#eJ ;;.62 birthsM?,<<< population
De"#+ r"#eJ 6.5- deathsM?,<<< population
Sex r"#i&J at birth( ?.?; maleCsDMfemale
under &) years( ?.<2- maleCsDMfemale
&)-*' years( ?.<6? maleCsDMfemale
*) years and over( <.2<- maleCsDMfemale
total population( ?.<64 maleCsDMfemale
Li'e expe#"ny "# ,ir#+J total population( 6-.52 #ears
male( 66.;- #ears
female( ,?.?, #ears
N"#i&n"(i#yJ (ndian
E#+ni !r&$psJ (ndo*%r#an ,;H, /ravidian ;5H, 7ongoloid and other @H
Re(i!i&nsJ 1indu -<.5H, 7uslim ?@.4H, )hristian ;.@H, 9ikh ?.2H, other ?.-H,
unspecified <.?H
L"n!$"!esJ :nglish enjo#s associate status but is the most important language for
national, political, and commercial communicationN 1indi is the national language and
primar# tongue of @<H of the peopleN there are ;? other official languages& %ssamese,
Bengali, Bodo, /ogri, .ujarati, Oannada, Oashmiri, Oonkani, 7aithili, 7ala#alam,
7anipuri, 7arathi, >epali, Iri#a, 0unjabi, 9anscrit, 9anthali, 9indhi, 'amil, 'elugu, and
ErduN 1industani is a popular variant of 1indiMErdu spoken widel# throughout northern
(ndia but is not an official language
;,
PESTLE An"(ysis
Br"Di(J A'#er #+e s(&.%&.n &' #+e ?<Ks #+e '&$s
s+i'#s #& s#",i(i#y
'he current governmentGs sustainabilit# rests on its abilit# to widen the benefits of
reforms. %fter a fragile victor# the current coalition looks stable .he general focus of the
government to be more pro*poor. Bra+il continues to strive for a global recognition.
8ulaGs government needs to balance social objectives with economic reforms.
T+&$!+ +in%ere% ,y er#"in s#r$#$r"( pr&,(ems* economic growth now looks stead#.
Bra+ilGs economic performance has a strong base. Bra+il seems to have left its turbulent
economic past behind though a number of basic issues still remain. % strict ta5ation
polic# is regarded as a burden amongst all social classes with inadeuate social returns
Despi#e !&0ernmen# in#er0en#i&n* in&me %isp"ri#ies* p&0er#y "n% re!i&n"(
im,"("nes rem"in +i!+ "hile the overall situation remains far from ideal, the
government has tried to address this head on./espite attempts to develop a solid social
infrastructure base, facilities remain inadeuate. (ncome ineualit# and landlessness are
severe issues that still affect an overwhelming part of the population.
In0es#men# in #e+n&(&!i"( in'r"s#r$#$re in /ey in%$s#ries is ,ein! $se% "s #+e
m"in %ri0er &' in%$s#ri"( pr&%$#i&n1 (nvestment in harnessing new technologies,
especiall# from the E9, has contributed largel# to the development of technolog#
intensive industries. 'he development of media and communications related
infrastructure and a skilled labor force to maintain this has taken place rapidl# over the
past two decades
Presi%en# L$(" +"s pr&mise% #& ,rin! #+e iss$es &' r"mp"n# re% #"pe* &rr$p#i&n
"n% &r!"niDe% rime $n%er &n#r&( )orruption scandals involving members of the
legal, e5ecutive and judiciar# s#stems are commonplace. Red tape is holding back
;-
opportunities for business in Bra+il. 'he e5istence of organi+ed crime and prison gangs is
rampant. 'he absence of strong laws protecting intellectual propert# is a growing issue.
'he 8ula government has identified ke# issues to tackle.
Ne. p&(iies in p("e #& &n#r&( %ep(e#i&n &' #+e r"in'&res# "n% &0er-exp(&i#"#i&n &'
n"#$r"( res&$res 'he government is taking action to control the environmental
degradation that has occurred over the past few #ears. (ndustrial progress had also had
significant environmental cost
R$ssi"J Re-en#r"(iD"#i&n "n% " re0i0"( %ri0en ,y n"#$r"( res&$res
0olitical stabilit# is being achieved at the e5pense of democratic fundamentals
0resident Fladimir 0utin has emerged as a dominant force in Russian politics and this is
likel# to continue. >ew RussiaGs foreign polic# stance is driven more b# economic factors
rather than political and militar# factors. /espite RussiaGs forceful intervention, the
)hechn#a issue continues to pose a threat to internal securit#
N"#$r"( res&$res ,"se% !r&.#+ is ,ein! %i0ersi'ie% ,y en&$r"!in! '&rei!n
in0es#men# &n " se(e#i0e ,"sis 'he Russian econom#Gs strong growth is driven b#
continuous e5pansion in internal demand, growing capital investment, high oil prices and
a relativel# cheap ruble
T+&$!+ #+ere is " m&0emen# #&."r%s !re"#er e&n&mi &n#r&(* #+e !&0ernmen#
re&!niDes '&rei!n in0es#men# "s "n imp&r#"n# %ri0er &' e&n&mi %e0e(&pmen#1
A %e(inin! "n% "!ein! p&p$("#i&n "(&n! .i#+ #+e !r&.#+ &' $r,"n "!!(&mer"#i&ns
"re inre"sin!(y imp&r#"n# iss$es1 RussiaGs population is steadil# declining and ageing
rapidl# :5panding urban agglomerations are characteri+ed b# rising affluence and
growing business opportunities but income ineualit# and a rising crime rate are the ke#
challenges
A#i0e !&0ernmen# in0&(0emen# #& s$pp&r# #+e !r&.#+ &' #+e ICT se#&r* #+&$!+
s&'#."re pir"y is s#i(( r"mp"n# 'he Russian government is activel# encouraging
;2
research and development in the technolog# sector.9oftware 0irac# continues to be a
major inhibitor to the growth of the ()' industr#
De0e(&pmen# &' "n in0es#&r-'rien%(y (im"#e '"es &,s#"(es &' &rr$p#i&n "n%
&r!"niDe% rime. Russia has created fle5ible and investor friendl# laws which are
helping in reali+ing high economic growth rates. )entrali+ation of power in the
presidenc# has adversel# affected judicial independence and legal function. 'he
government must make a concerted effort to eliminate rampant criminal activit#.
E&n&mi pr&!ress is #"/in! pri&ri#y &0er en0ir&nmen#"( &nerns E&n&mi
development has taken a priorit# over environmental sustenance RussiaGs vast network of
oil pipelines and nuclear waste disposal s#stem need urgent upgrading and maintenance.
.lobal warming is becoming an important issue
In%i"J Risin! in#ern"( iss$es m"y %e-s#","(iDe #+e .e(( p("e% re'&rms
/eclining in influence, (ndian >ational )ongress still holds the ke# to political stabilit#
.aining the support of national and regional parties makes it difficult for a single*part#
government to be formed at the center. 0olitical stabilit# in (ndia is threatened b# the
Oashmir dispute and other internal issues. (ndiaGs current position in the global arena is
reflective of its political and economic development over the past two decades.
D&$,#s &0er s$s#"in",i(i#y &' #+e $rren# r"pi% e&n&mi !r&.#+ &n#in$es #& p("!$e
#+e s$,-&n#inen# (ndia has registered robust economic growth over the recent past
which has put it in a relativel# strong economic position. 1owever, doubts over the
sustainabilit# of this growth continue to plague the econom#. (nfrastructure holds the ke#
to sustain current levels of economic growth. 'he government has adopted a liberal
approach towards foreign nvestment in most sectors
Reen# e&n&mi %e0e(&pmen# r"ises ne. s&i"( iss$es
)hanging social and demographic make*up of the econom# is presenting new
opportunities as well as challenges 9ocial dimensions of povert# and ineualit# need to
@<
be tackled along side economic development 'he social infrastructure in place is not
sufficient to meet the needs of a burgeoning population
In%i" re!is#ers "n inre"sin! #e+n&(&!i"( presene !(&,"((y
8arge talent pools, the development of reuired infrastructure and incentives provided b#
state governments are attracting investment in the ()' sector. 'here is evidence of
increasing technological capabilit# and learning among (ndian firms. % growing number
of 7>)Gs have been setting up offshore development centers and R6/ facilities in (ndia
since the ?22<s. /espite the impressive performance, there is a huge scope for
improvement in the software sector.
S#eps +"0e ,een #"/en #& impr&0e #+e (e!"( sys#em #+&$!+ (&# s#i(( rem"ins
(nitiatives have been taken to strengthen the judicial s#stem. Ither indicators of legal
health see onl# marginal improvement
En0ir&nmen#"( &nerns rem"in ,$rie% $n%er e&n&mi "n% s&i"( pr&,(ems
0olluting industries and agents #et to be checked. 'he suppl# of water for direct
consumption, irrigation purposes and commercial purposes still remains an issue
/emographic and economic changes bring new dimensions to environmental concerns.
C+in"J Emer!in! +"((en!es s+i'# '&$s "."y 'r&m e&n&mi !r&.#+
)hina continues to be ruled in a strong, authoritarian manner 1owever, in order to adapt
itself to the changing economic and social environment, the ))0 has created a variet# of
new political institutions to provide a bridge between state and societ# "ith rapid
privati+ation of the econom#, a variet# of business and trade associations have been
created, largel# in the coastal regions, and are having an increased influence of those
outside the formal part# structure.(n the international arena, )hina is emerging as an
active pla#er. 'his aspiration is evident in its less confrontational and more constructive
approach towards regional and global affairs.
@?
A'#er #.& %e"%es &' r"pi% e&n&mi !r&.#+* C+in" #"/es &nsi&$s me"s$res #&
s#",i(iDe "n% s$s#"in '$#$re !r&.#+. )hina has been the fastest growing econom# in
:ast %sia and the world for the last two decades 1oweverN there are growing concerns
about the sustainabilit# of the continuous high growth rates 9teps to cool the econom#
might prove ineffective. )hina still continues to protect its econom#
C+in"Ks %em&!r"p+i #r"nsi#i&n #& "n "!ein! p&p$("#i&n "n% !r&.in! ineH$"(i#y
p&ses seri&$s e&n&mi +"((en!es % major demographic issue facing )hina is its
ageing population. (ncreasing ineualit# is emerging as an issue in )hina
'he )hinese econom# is witnessing a technological shift . 1istoricall# )hina focused on
low cost bulk manufacturing and placed little emphasis on branding but recentl# there has
been a growing shift towards use of high*end technologies and brand creation. )hina is
attempting to create its own technological standards. 'here is strong political control of
the judiciar#. $reedom of the press and religion has been severel# restricted. %lthough
(ntellectual 0ropert# 8aws have been strengthened, significant progress needs to be made
in the implementation of these laws
T+e Inre"sin! en0ir&nmen#"( &s# &' exp"nsi&n +"s '&re% #+e !&0ernmen# #&
,e&me m&re en0ir&nmen# 'rien%(y )entrali+ed polic# making combined with a high
degree of emphasis on economic growth has resulted in )hina becoming one of the
largest global polluter .
@;
IT SECTOR
Bra+il, Russia, (ndia and )hina to 8ead (nternet .rowth 'hrough ;<??
'here will be ?.5 billion people with (nternet access in ;<??, with the biggest growth in
the online population occurring in Bra+il, Russia, (ndia and )hina, according to a new
report.
(n its R"orldwide Inline 0opulation $orecast, ;<<6 to ;<??,R =upiterResearch anticipates
that a @- percent increase in the number of people with online access will mean that, b#
;<??, ;; percent of the :arthGs population will surf the (nternet regularl#.
=upiterResearch sa#s the worldwide online population will increase at a compound
annual growth rate of 6.6 percent during the ne5t five #ears, far outpacing the ?.? percent
compound annual growth rate for the planetGs population as a whole. 'he report sa#s ?.?
billion people currentl# enjo# regular access to the "eb.
>orth %merica will remain on top in terms of the number of people with online access.
%ccording to =upiterResearch, online penetration rates on the continent will increase from
the current ,< percent of the overall >orth %merican population to ,6 percent b# ;<??.
1owever, (nternet adoption has Rmatured,R and its adoption pace has slowed, in more
developed countries including the Enited 9tates, )anada, =apan and much of "estern
:urope, notes the report.
%s the online population of the Enited 9tates and )anada grows b# about onl# @ percent,
e5plosive adoption rates in )hina and (ndia will take place, sa#s =upiterResearch. 'he
report sa#s )hina should reach an online penetration rate of ?, percent b# ;<?? and (ndia
should hit , percent during the same time frame. 'his growth is directl# related to
infrastructure development and increased consumer purchasing power, notes
@@
=upiterResearch.
B# ;<??, %sians will make up about 4; percent of the worldGs population with regular
(nternet access, 5 percent more than toda#, sa#s the stud#.
0enetration levels similar to >orth %mericaGs are found in 9candinavia and bigger
"estern :uropean nations such as :ngland and .erman#, but =upiterResearch sa#s a
number of )entral :urope countries Rare relative (nternet laggards.R
Bra+il Rwith its soaring econom#,R is predicted b# =upiterResearch to e5perience a 2
percent compound annual growth rate, the fastest in 8atin %merica, but )hina and (ndia
are likel# to do the most to boost the worldGs online penetration in the near future.
$or the stud#, =upiterResearch defined Ronline usersR as people who regularl# access the
(nternet b# Rdedicated (nternet accessR devices. 'hose devices do not include cell phones.
Bra+il, Russia, (ndia and )hina, commonl# referred to as BR(), consumed A65 billion of
information technolog# in ;<<5 and combined (' spending in BR() is e5pected to reach
nearl# A??< billion b# ;<<2. %lthough the# are often described as a group, Bra+il, Russia,
(ndia, and )hina are a diverse and comple5 set of economies and cultures. 'oda# these
economies account for just 6H of global (' consumption, but b# ;<<2 the BR()
emerging group will account for -H of global technolog# spending, making it eual in
si+e to the =apanese (' market. 'his is this reason wh# BR() is becoming an important
strategic focus for man# global technolog# companies.
7onitoring developments in technolog# markets in these countries is a difficult and time*
consuming task. (/) has over ??< emplo#ees in the BR() countries, and its broad
research coverage is designed to meet the tactical needs of countr# sales and marketing
managers as well as the more strategic reuirements of regional and global e5ecutives.
@4
Energy Sector
T+e BRIC &$n#ries - Br"Di(* R$ssi"* In%i" "n% C+in" - +"0e +e(pe% p$s+ #+e s#ee(
%em"n% !(&,"((y .i#+ s#r&n! per'&rm"nes re&r%e% in #+e p"s# ye"r "n% is expe#e%
#& s$s#"in in &min! ye"rs #&&1
'he (nternational (ron and 9teel (nstitute C((9(D said that with onl# two months left before
the #ear gets over, the e5pectation for global demand in allo# for ;<<, is to increase 6.-H
due to solid contribution given b# BR() countries * Bra+il, Russia, (ndia and )hina,
reported.4?H of the worldwide steel demand in the #ear ;<<6 came from the BR()
countries and a forecast b# ((9( e5pects them to lead the consumption growth b# around
?;.,H in the #ear ;<<, and over ??H in ;<<-.
%pparent consumption of steel in )hina is anticipated to increase b# ??H this #ear and
over ??.@H in ;<<-, making up @5.<?H of the worldwide demand for two #ears time. $or
(ndia, consumption of steel is e5pected to grow b# ?@.5H this #ear and around ??.6H in
the #ear ;<<-.
0ositive predictions are being made for RussiaGs market, following an increase of ;5H in
consumption for the #ear ;<<, and a rise of around 2.4-H for ;<<-. 'he rise is being
fuelled b# the construction and energ# sectors. Bra+ilGs apparent consumption of steel is
projected to go up b# ?5.6<H this #ear and 5H in the #ear ;<<-, with public investment
program partl# contributing to fi5ed capital formation.
'he surging steel demand will benefit the iron*ore diggers the most, and steel producers
of coking CmetallurgicalD coal. 7anganese and mol#bdenum are also going to benefit but
for stainless steel, the demand for chrome and nickel will remain underpinned.
(n a statement published b# Resource (nvestor, =ohn 9urma, ((9(Gs )hairman said,
RBesides BR() countries we are pleased to note that >orth %frica, 9outh %frica and the
@5
7iddle :ast are emerging as strong growth regions, as higher energ# and raw material
prices associated with growth in )hina, as well as other developing nations, increase
incomes and boost investment in these regions.R
% research anal#st at R>)I9 sa#s convincingl#, R'he economic boom in developing
parts like the BR() countries of Bra+il, Russia, (ndia and )hina has increased the steel
demand and its price. 'he demand for steel is boosted due to infrastructure development,
like construction of roads, buildings and bridges, in these countries. 0rospering
economies also means wealth# citi+ens, who are demanding for autos and consumer
goods that contain steel.R
Bra+il, Russia, (ndia and )hina, also known as the BR() group of countries, are e5pected
to overtake the rich countries in primar# energ# consumption b# ;<@< and worsen their
environmental calamities, 0aris*based Irganisation for :conomic )ooperation and
/evelopment CI:)/D has warned.
(ssuing the ;<<- I:)/ :nvironmental Iutlook the rich countr# economic thinktank
said !the primar# energ# consumption of Bra+il, Russia, (ndia and )hina together is
e5pected to grow b# ,; per cent between ;<<5 and ;<@<, compared with ;2 per cent in
the I:)/ countries.
Enless ambitious polic# action is taken, greenhouse gas emissions from just these four
countries will grow b# 46 per cent in ;<@<, surpassing those of the @< I:)/ countries
combined, it warned, maintaining that people in the BR() countries are alread# facing
man# environmental problems.
@6
T+e M"r/e# '&r P+"rm"e$#i"(s in
Br"Di(* R$ssi"* In%i" > C+in"
'he BR() countries3 pharmaceutical markets are currentl# valued at E9A54.2 billion.
'his is a large sum of mone#, but is collectivel# lower than found in leading markets
such as the E9% and =apan. .rowth rates, ranging from 5H in Bra+il to ?5H in Russia
are impressive, but the low starting point 4 along with a range of other operational issues
4 means companies must be targeted in the opportunities the# pursue.
Ipportunities do e5ist
'here are, of course, wide regional differences in e5penditure levels within the BR()
countries, far more so than in developed countries where health s#stems have evolved to
provide a more uniform level of coverage. %ll four countries have a relativel# wealth#
urban population with a far greater spending power than their respective national average.
(n the case of )hina and (ndia, these urban populations have grown rapidl#, and number
hundreds of millions. 'he challenge for these countries is to e5tend this level of wealth to
the rest of the population, in order that better levels of healthcare become affordable.
% long haul
'his is evolution not revolution, and change will be incremental. 9hort*term opportunities
e5ist in meeting the health demands of the burgeoning middle classes, and future
prospects are bright, where stead# growth in BR() markets will erode commercial
differences with the established markets in >orth %merica, =apan and :urope.
)urrent and accurate decision support information is vital
:ffective planning is vital and that is wh# :spicom, the leading provider of
pharmaceutical market intelligence, has issued this report collection %he +arket for
Pharmaceuticals in ,ra-il, .ussia, /ndia 0 1hina !""2. $or each countr# there is a
comprehensive e5amination of the market for pharmaceuticals which covers all aspects
@,
of the operating environment from the regulator# situation through health
provisionMe5penditure to domestic production. (mportantl#, each market evaluation
includes 5*#ear growth forecasts and 9"I' anal#sis. %n additional benefit * at no e5tra
cost 4 is that concise uarterl#*updated outlook reports are included in the price.
INDIA
"ith a population of over one billion, the pharmaceutical market in (ndia has
considerable potential. :spicom3s market projections assume stable market growth of
around -.4H per #ear, putting the market at E9A?5.6 billion b# ;<?;. (t should be noted,
however, that if calls for an end to drug price controls come to fruition, short*term market
growth is likel# to be much higher.
%s (ndia develops, the disease profile of the countr# is changing. 'raditional infectious
diseases such as smallpo5 have been eradicated and the number of cases of vaccine
preventable conditions has also been greatl# reduced. %long with life e5pectanc#,
however, the prevalence of western st#le diseases has been increasing. 'here are around
,<<,<<< new cases of cancer each #ear and a total of around ;.5 million cases. %round
two thirds of cases are in an advanced stage at the time of detection. 'he majorit# of
these are smoking related cancers.
CGINA
'he pharmaceutical market in )hina Ce5cluding 1ong OongD is estimated at E9A;;.6
billion in ;<<,, an increase of around -.5H over the previous #ear. 'he figure is
distorted, however, b# the presence of traditional )hinese medicines C')7sD. 'he ')7
market is estimated to be worth around E9A5*6 billion. 'he si+e of the market for
western*st#le pharmaceuticals, therefore, can be reckoned at around E9A?,.< billion,
eual to around E9A?@ per capita. 'his makes )hina one of the largest markets in the
world, and second onl# to =apan in %sia. 0er capita spending on pharmaceuticals remains
among the lowest in the world, however, and is broadl# comparable with (ndia.
@-
'he )hinese pharmaceutical market has shown impressive growth in recent #ears, in
tandem with the countr#3s rapid economic e5pansion. 'he influ5 of foreign
multinationals in recent #ears has offered continued investment, and production plants
and R6/ facilities are being e5panded all the time. (mprovements in regulator# practices
are making the abilit# to sell imported products uicker and easier, while the lowering of
tariffs on imported goods and an increase in transparenc# of legislation has made a
notoriousl# hard*to*penetrate market a more attractive proposition for overseas
companies. (mports continue to rise, with ;<<5 seeing an increase of ;?.-H. Recent
government price cuts, particularl# pertaining to the burgeoning categor# of antibiotics
are likel# to affect some companies, and although an anticipated price war is likel# to
have an effect on the market, the industr# as a whole will become more competitive.
BRAIIL
/ue to the depreciation of the E9 dollar, the Bra+ilian pharmaceutical market is
e5periencing high growth in dollar values. 'he Bra+ilian pharmac# sector was valued at
E9A2.- billion in ;<<6, well ahead of the pharmac# sector in 7e5ico, valued at E9A2.6
billion. /rug prices continue to increase in spite of generics competition. :5cluding
()79 and other ta5es applicable to drugs, $:BR%$%R7% estimated the annual
pharmaceutical market at E9A?<.2 billion and ?., billion units in ;<<6. (ncluding ()79
and other ta5es, :spicom estimates the market to reach around E9A?@.6 billion in ;<<,,
eual to E9A,; per capita.
'he generics sector is dominated b# local producers, restricting the market entr# for
foreign producers. (n ;<<6, generics sales amounted to E9A?.? billion, eual to ?<.,H of
the overall pharmac# sector. .enerics sales will continue to outperform the pharmac#
sector, fuelled b# generics production of oral contraceptives 6 hormones and
blockbusters losing their patents.
@2
RUSSIA
(n ;<<,, the Russian pharmaceutical market is estimated at E9A-.@ billion, eual to
around E9A52 per capita. 'he market si+e is almost three times larger than the )+ech
Republic. (n per capita terms, the market is similar to Romania. 'he market is split
between imported products and cheap locall#*produced generics. (mports account for
around 62H of the pharmaceutical market. %ccording to the 7inistr# of 1ealth and
9ocial /evelopment, appro5imatel# 6<H of imported drugs were generics in ;<<6.
(n ;<<5, new rules governing the suppl# of drugs to vulnerable population groups came
into force. 0atients have to choose between receiving a package of benefits including free
medicines or accepting a sum of R5?@ each month. 'he government initiall# allocated
E9A?., billion for the programme, but this fell b# 4?H in ;<<6, due to half of the
population opting out in favour of the cash euivalent. 'he budget for ;<<, is R@4.2
billion CE9A?.@ billionD, although this is unlikel# to cover costs.
A$#& in%$s#ry !r&.#+ #& &me 'r&m BRIC &$n#riesJ
4<
'he biggest breakthrough growth for the automotive industr# will come from BR()
countries .'hese countries B (ndia, Bra+il, Russia and )hina B will account for more
than 4< per cent of forecast global light vehicle assembl# increases and represent 5; per
cent of the industr#Gs forecast global capacit# e5pansion.
'hese factors are reflected in the fact that nearl# all major global automakers are pursuing
a BR() strateg# in some form as the# attempt to gain competitive advantage b# tapping
the potential of these emerging markets. 'his is just one of the findings included in the
annual S.lobal %utomotive $inancial ReviewG b# 0ricewaterhouse)oopers.
%ccording to 7r Ramesh Rajan, %utomotive (ndustr# 8eader, 0w), R'he (ndian
automotive manufacturing sector is poised to grow, with increasing domestic market and
(ndia being projected as the ShubG for small cars. Enveiling of the 'ata >anoBand the
h#sterical response it triggered off in (ndia and overseasBthe ultra low cost car is right
on top of the automotive mind*space . 9o much so that anal#sts and e5perts attending the
/etroit auto show just after the /elhi %uto :5po were ama+ed to see that the car that
made the most news there was the one that wasn3t even on show B namel# the >ano.
'ata >ano sets the platform for (ndia as a frugal engineering hub
9o far we know prett# much ever# scrap of information that is avail*able on the >ano, till
the car is officiall# launched later this #ear and is available for test*drives . "e know that
the standard variant B sans airconditioning and power steeringBwill have an e5*dealer
price of Rs ? lakh Cthough customers will have to shell out the value added ta5 and the
logistics cost from the factor#D. 'hat it sports a 6;@ cc, two*c#linder , 70$( engine with
single balancer shart, four*speed manual transmission and top speed of ?<5 kms per hour.
'hat the powertrain is packed in the rear to increase interior space.
%ll the major global vehicle manufacturers have either established or are in the process of
establishing their presence in (ndia like Folkswagen, 1#undai 7otors In%i",,
B7",>issan,1onda,7aruti.'ata 7otors, $ord,Ipel (ndia, Renault, 'o#ota
4?
etc. (ndustr#, however, needs to work with .overnment to address some of the ke#
areas such as inadeuate infrastructure, high direct and indirect ta5 regime, infle5ible
labour laws, etc., to ensure that the industr# is able to sei+e the opportunit# and achieve
the potential growth.R
%s per the report, the emerging strength of the BR() countries is common to all
manufacturing sectors. "hat makes the automotive industr# so different is the additional
d#namics of consumer tastes and demands, which var# so much from market to market.
'he challenge is responding to these with new strategies and products. )ompanies that
maintain a Sbusiness as usualG strateg# or wait too long to act will find it e5tremel#
challenging to sustain momentum as the competitive environment transforms around
them. %s the auto industr# becomes more global and markets more competitive, the
winners will tend to be those companies that full# capitalise on the opportunities in
BRIC Countries unique positioning in
the Retail Market
4;
%s retail opportunities in emerging markets go, the undoubted leaders are the BR()
nations of Bra+il, Russia, (ndia and )hina. >ot onl# are these countries outrunning the
developed world with their slew of economic reforms, but the# have also managed to sta#
ahead of other emerging markets with their alread# si+eable retail markets. %nd
considering the saturated markets of the developed economies, the global investor can ill*
afford to ignore the growth of organised retail in these countries.
(n (ndia, the Retail sector is the second largest emplo#er, after %griculture. .rowth of the
Russian retail market has also seen impressive. 'his unprecedented growth is due mainl#
to the fact that the Irganised retail markets in these countries are still in an infanc# stage
but are growing ver# fast. BR() markets are in general fragmented with a large number
of private owners and neighbourhood Tmom 6 popG stores. 'herefore, as disposable
income rises in these countries, aided b# second stage economic reforms, an increasing
trend towards urbanisation and changing consumption patterns are fast leading to the
growth of the retail industr# in these nations.
' he small share of organised retail Cjust 4.6H in the case of (ndiaD and the highl#
fragmented nature of most BR() retail markets, leave plent# of room for new entrants
and also for market consolidation. :arl# movers have been able to and will continue to
reap the rewards hereN and as earl# movers produce tangible results, retailers that are not
as #et in the BR() markets will need to address this si+able opportunit# .
'he BR() countries have all made an impressive impact on the global econom# in these
earl# #ears of the twent#*first centur#, as each countr# in its own uniue wa# e5periences
si+eable build*up in economic wealth even while fighting protectionist trade barriers from
the developed world. 9tatistics show that within five #ears of the formation of the BR()
concept, (ndia and Russia have e5panded their econom# considerabl# while )hina clearl#
leads the pack with its high ./0 growth and understandabl# the most stable political
scenario,
BRAIIL
Bra+il represents the ?6th largest retail market in the world growing at 6.6H )%.R.
Bra+il is a high*potential market for retail as a result of the countr#3s
4@
large and growing population Ce5pected to reach ;<< 7illion b# ;<?@D and its
attractiveness to foreign investors as a strategic base for the 8atin %merica region which
will continue to attract mone# while creating additional jobs.
'he Bra+ilian grocer# market is consolidating rapidl# as supermarket and h#permarket
chains strive to acuire good locations, achieve economies of scale and increase their
leverage with suppliers. 1owever, with no group #et accounting for more than ?< percent
of the market and the top five still claiming just around ;5 percent, there is potential for
still greater consolidation in the future.
Bra+il has been a favoured $/( destination too. (n retail, $6. was the most attractive
segment for $/( in Bra+il till recentl#, with over E9A5 billion invested. 'he growing
segments ripe for entr# include& cosmetics and personal care, consumer electronics and
food and beverages ** such as juices, soft and alcoholic drinks.
!SS"A
Russia3s econom# has grown strongl# for - #ears with ;<<6 growth just under ,H and is
attractive to foreign investors. >ational operators currentl# have the largest market share
but multinational retailers have strong positions in modern retail formats. (nvestment
priorities are similar to developed markets and include efficient suppl#chain, private label
and customer lo#alt#.
RussiaGs food retail market is e5tremel# fragmented, and it is onl# in the cities of 7oscow
and 9t 0etersburg that significant consolidation has taken place. %bout ,<*-< percent of
the organised shopping centre developments are concentrated in these two major cities.
In a countr#wide basis, the top five grocers capture a combined share of around 2H of
the modern grocer# distribution. 'here is also a marked absence of hard discounters in
this highl# price*sensitive land ** thereb# creating a huge opportunit# area.
'he main investors in Russia happen to be :uropean countries. "ith the majorit# of
foreign investments directed towards retail and wholesale trade, more than in other BR()
countries, Russian retail attracts a large portion of $/(. %s far as retail categories are
44
concerned, besides grocer# development, cosmetics and personal care hold much promise
with an annual growth rate of ?5 percent. )urrentl# there is also an absence of value
retail brands in Russia.
(>/(%
(ndia represents the ??th largest retail market in the world and is growing at ?<.4H
)%.R. .iven the lower income levels and comparativel# strong restrictions on foreign
direct investment, foreign retailers have been far less active in (ndia than in )hina. 8ack
of infrastructure Croads, rail, etcD will impede growth. 9pending on !$ood at home is
e5pected to represent over 5<H of total spending b# ;<?<.
'he .overnment of (ndia seems to be on a gradual, but definite path toward allowing
foreign retailers into the countr#. %nd when it finall# opens the floodgates, the peak time
to enter will uickl# pass ** giving retailers that enter now a distinct edge. 7oreover,
apart from the metropolitan centres, retail formats in (ndiaGs tier*(( and ((( cities too are
growing, thanks to the e5pansion of the ('M(':9 and B0I industries, which are
instrumental in creating consumption demand for high*end lifest#le products b#
emplo#ing large numbers of #oungsters.
'he current polic# prohibits $/( in retail trading, e5cept for T9ingle BrandG product retail
subject to a ma5imum 5? percent foreign euit#, and ?<< percent $/( in wholesale trade
alone. (ndia offers huge opportunities across all retail categories and formats, with the
largest opportunit# waiting in the $6. sector, which is less than one percent organi+ed at
the moment. /eveloping retail agribusiness ventures, among others, is advised .
CGINA
45
)hina represents the @rd largest retail market in the world and is growing at a 2H )%.R.
)hina3s population of ?.@B consumers along with high economic growth Rates, recent
entr# into the "'I and opening up of its markets offers retailers considerable
opportunities for growth. !$ood at home will remain the largest 9egment.
/omestic retailers are now scrambling to enter tier*(( cities to consolidate their positions
before global retailers establish themselves in these areas too. "ith growing urban as
well as rural incomes, national as well as international retailers are set to cash in on the
shopping boom.
)hinaGs implementation of "'I reuirements, together with continued liberalisation and
deregulation has lead to increased investor interest. $/( t#picall# occurs through foreign
companies where the foreign partner must hold at least ;5 percent ownership. "ith a fast
saturating metropolitan scenario, opportunit# toda# lies in tier*(( cities and in rural hubs,
although it remains to be seen how the whole of )hina integrates in to the free enterprise
mode and still manages to continue with the present political s#stem.
M"r/e# Tren%s* C+"((en!es > Opp&r#$ni#ies
?D %cross BR() countries, the food and grocer# C$6.D segment is clearl# driving
retail growth. $or eg, retail food sales dominate the total retail market in Bra+il,
accounting for almost 54 percent of the total retail sales, while Russia is the
fastest growing retail food sales market in the world, with the potential to again
double in si+e b# ;<<-.
;D 'he prevalence of :nglish as a language of communication to a ver# great e5tent
facilitates material sourcing and business communication. "hile (ndia and Russia
pose no problems in this regard, Bra+il and )hina present communication
problems for foreign companies.
@D 'he importance of governments that are uick on decision*making and passing
liberal trade laws cannot be emphasised enough. (n )hina, for instance, being a
46
non*democratic countr# makes it easier for foreign investors to do business sans
bureaucratic red*tapism Cin comparison to a democratic countr# like (ndiaD, the
obvious reason being that the political establishment is not directl# accountable to
the people.
4D .rowing urbanisation and metropolitan saturation is leading to the e5pansion of
retail formats and investment opportunities towards tier*(( cities and rural hubs
across all four countries.
5D )ontinued economic reforms together with the growth of organised retail
Cespeciall# in the $6. segmentD has led to growing rural incomes, triggering off
far*reaching, social impacts. 'he upcoming T.olden UuadrilateralG plan for
roadwa#s in (ndia, which is to connect the four cities of /elhi, Oolkata, 7umbai
and )hennai, will have massive economic and social repercussions on rural and
semi*rural clusters along the vast network. (n )hina too, the government plans to
create a rural retail network covering ,< percent of all villages b# ;<<-.
6D %part from $6., personal care, consumer durables and electronics seem to be
other popular consumption segments, especiall# among the rising middle classes
with their rising incomes and changing consumption patterns.
,D T8ocalisationG of goods and services is e5tremel# important for all global
companies planning an entr# into the BR() markets. 'hese are all ver# vast and
diverse nations with multiple traditions and aspiration levels that need to be
tackled intelligentl#.
-D % non*economic, intangible market factor among these emerging economies
happens to be a rising sense of national pride that needs to be ver# sensitivel#
addressed b# all foreign companies intending to set up businesses here.
2D %nother common challenge across all BR() markets is the near absence of
infrastructure problems.
4,
E'e on Inia
(ndiaGs imminent urbanisation process has implications for demand for housing, urban
infrastructure, location of retail, and demand for consumer durables.
'he on*stream infrastructure development will drive growth in the transportation sector,
spur demand for vehicles, increase real estate values along the !.olden Uuadrilateral
corridor, and potentiall# boost construction of suburban homes as people escape
congested cities. 0lus, it will open up thousands of villages en route to a global audience
and effectivel# integrate them with the growing (ndian econom#.
V .rowth of the Retail market, to a great e5tent, is the dependent on the si+e of the
countr#Gs consuming class and the rate of growth of ./0, especiall# disposable incomes.
V (ndia is the worldGs second most populous countr# and its ./0 growth is likel# to
surpass that of )hina b# ;<?5.
V (t is estimated that (ndiaGs ./0 will surpass that of the E9 before ;<5<, to make it the
worldGs second largest econom#.
V Reflecting on the robust growth in (ndiaGs ./0, consumer e5penditure Cin current
pricesD grew at a relativel# high pace of nearl# ?< percent per annum over the past two
#ears.
V (ndiaGs advantage lies in the fact that it has the largest #oung population in the world 4
over -2< million (ndians are below 45 #ears of age. 'he median age for (ndia is ;5 #ears
as compared to ;- #ears for Bra+il, @@ #ears for )hina and @- #ears for Russia.
V 'here are more :nglish speaking people in (ndia than on the :uropean continent.
4-
V 'he retailing industr# in (ndia, estimated at E9/ ;,< Billion in ;<<6, is e5pected to
double to E9/ 44< Billion b# ;<?<.
V 'he si+e of the organised retailing market in ;<<6 stood at E9/ ?;.4 Billion in ;<<6,
thereb# making up a mere 4., percent of the total retailing market.
V If the total retail market, food and grocer# retail is b# far the single largest block
estimated to be worth a whopping Rs.64;,;<< crore, but more than 22 percent of this
market is dominated b# the neighbourhood mom 6 pop stores.
V )lothing, te5tiles and fashion accessories constitute the second largest block.
V $or the #ear ;<<,, the (ndia %pparel Report ;<<, e5pects growth of organised retail to
touch 4< percent. $rom ;<<- onwards Cuntil at least ;<?<D, organised retail is e5pected to
register around 45 percent JoJ growth in (ndia.
V 'otal retail in (ndia, which registered 5., percent JoJ growth from ;<<4*;<<6, to range
between that and 6 percent JoJ growth over the ne5t @*4 #ears.
V "ith these growth percentages and following from our estimates for ;<<6, the future
estimatesW for organised retail in (ndia& ;<<,4 Rs.,,,<<< croreN ;<<- 4 Rs.???,5<< croreN
;<<2 4 Rs.?6;,<<< croreN and ;<?< 4 Rs.;@5,<<< crore. CWestimates based on ;<<6
pricesD.
V (n terms of formats, the energ# in terms of new investments is e5pected to be driven
towards the supermarkets and h#permarket segments.
V %ll new pla#ers 4 Reliance (ndustries, Bharti RetailM "al*7art, %F Birla .roup 4 have
shown interest towards developing these two formats, along with wholesale, cash 6 carr#
outlets, while (ndiaGs largest retailer 4 0antaloon Retail (ndia 8td. 4 has a continuous store
rollout schedule for its Big Ba+aar h#permarkets and $ood Ba+aar supermarkets.
42
BRICJC"r,&n F&$n%"#i&n O' E&n&mies
0rice change is the ultimate focus of investors, but investing as a forward looking process
reuires e5amination of fundamental issues. Ine fundamental issue in countr# anal#sis
is the degree of carbon dependenc# * principall# oil, natural gas and coal.
5<
)arbon based economies could once assume that carbon for energ# and for material was
unlimited and that it would alwa#s be available. (n "orld "ar (( control of %frican and
7iddle :astern oil supplies was an important strategic issue that began to put carbon
availabilit# as an issue into clearer view. B# the ?2,<3s an I0:) oil embargo showed
that low cost oil was not a total certaint#. (n the last few #ears, both suppl# and price
have come into fierce focus. .lobali+ation and global growth in standards of living
Cessentiall# carbon dependentD have put geologic supplies of liuid carbon fuels into
uestion. :volution of terrorism as a new global war with no end in sight has put
politicall# controlled supplies of liuid carbon into flu5, along with disruptive price rises.
"hile there are non*carbon energ# alternatives, such as uranium Cpro5# ))=D, the world
is so entrenched in carbon dependenc# that it is be#ond individual investment time
frames to consider substitution on a global scale. "hile there are enormous coal supplies
and technologies to convert coals to liuids and gases C9%9I8 in 9outh %frica& 998D,
these will take man# #ears to implement on a global scale.
'here is not necessaril# a good or bad level of carbon dependenc#N however awareness of
each countr#3s carbon dependenc# could be useful in predicting economic performance
under scenarios with var#ing carbon price levels and available suppl#.
9ome countries ma# do better in a carbon starved world, or in a scenario where carbon
prices or supplies are in crisis. 'he table below shows some ke# carbon dependenc# facts
for major countries and regions. 8et3s think about what implications this data ma#
suggest.
BR() CBra+il, Russia, (ndia and )hinaD, for e5ample, is an#thing but a monolith in terms
of carbon. Russia Cpro5# 'R$D and Bra+il Cpro5# :"PD are major carbon e5porters.
Bra+il e5ports both non*renewable petroleum and renewable alcohol, whereas Russia
produces onl# non*renewable oil and gas. Russia is in a good carbon situation toda#, but
the# are acting recklessl# with relationships and the# have not shown themselves to be
particularl# trustworth# in the energ# sector B caution is appropriate allocating to
Russia.
5?
)hina Cpro5# $Q(D is about to be, or ma# alread# be, the world3s largest carbon consumer
and is working ver# hard to sustain its carbon supplies to drive its econom# and maintain
civil order ,which ma# depend on growth of its econom#. (ndia Cpro5# (>0D is a net
carbon consumer, but nowhere near the level of )hina . (ndia has built an econom#
based on e5porting brains and services, instead of manufactured goods as )hina has
done.
Both (ndia and Bra+il consume low percentages of world carbon and have low per capita
carbon consumption. 'hat ma# mean the# have lower short term sensitivit# to a price or
suppl# crisis, e5cept to the e5tent that their customers suffer from carbon problems.
Bra+il, as a significant non*renewable and renewable carbon e5porter and an econom#
with low carbon consumption per capita, ma# be in the best situation to withstand a
carbon crisis. 'he# are also more insulated from geopolitical risk and war than the other
BR() countries.
FINANCIAL SECTOR
$inancial services market consists of institutions such as banks, insurance companies,
finance houses and assets management companies, among others, that deliver products to
direct end users, the customers, being the largest and most visible single group of end
5;
users.'he retail products available to this group in its generic form include depositor#
accounts, credits and pa#ment services. 'hough statistics are sketch#, it would not be out
of place to suggest that this market encompasses more than @<< businesses, which
include the ;4 commercial banksN mortgage banks, securities companies and brokers,
insurance agencies, micro*finance banks and leasing companies, among others.
Retail financial services are considered heavil# regulated, especiall# as offered b#
commercial banks. 'hough deposit rates have been deregulated, competition in the
industr# has kept rates in check. 7ore radical changes in the industrial landscape has
witnessed importation of the global trend of convergence between corporate banking,
investment banking, retail banking and insurance, with universal bank licensing and the
merger process la#ing to rest an# lingering thought of product dichotom#.
Banking and insurance products are well*established among (ndiaGs growing upper* and
middleincome groups but other products, such as funds are not. Banks are looking at their
distribution and cross* selling strategies %lthough )hina ma# be grabbing most of the
headlines in terms of financial services opportunities, neighbouring (ndia, the worldGs
largest democrac#, is attracting its fair share of interest. Both are part of the BR()
CBra+il, Russia, (ndia and )hinaD uartet of countries that are garnering huge investment
interest from the global banking communit# thanks to their enormous, underserved retail
and mass affluent banking markets.

:ver#da# financial services are out of reach for more than two billion people in
developing countries. But the rapid growth of branchless banking 4 including mobile
phone banking 4 is reducing the cost and e5panding the availabilit# of such services.
Bra+il3s increase in access to finance has been accomplished largel# through the more
than 25,<<< banking !correspondentsBlocal merchants and post offices that act as
agents for banks, euipped with card*swipe and barcode*reading point*of*sale C0I9D
terminals. (n the past five #ears, technolog# has brought ?@ million people in Bra+il into
the banking s#stem
5@

(n Russia, a broad network of bank %'7s, 0I9 terminals, and online e*mone# providers
offer transaction services outside of traditional branch offices.

B"# nations gi$e highest returns in e%erging %ar&ets
BR() CBra+il, Russia, (ndia and )hinaD countries have outperformed other emerging
markets in ;<<-. %ccording to 7organ 9tanle# )apital (nternationalGs C79)(GsD emerging
market standard inde5, investments in BR() countries have given a return of 5<.;;H,
while emerging markets of :astern :urope gave second best return of 4@H.
%mong the BR() countries, )hina, which was languishing for last four #ears, gave a
return of ,?.6-H as per 79)( inde5. Russia was ranked second with a return of 5?.-<H
and (ndia came third with a return of 45.25H. Bra+ilian market gave a return of 4<.46H
as per (nde5. (n absolute terms also, the )hinese stock market outperformed other stock
markets among the BR() countries. 'he ?-<*share inde5 of 9hanghai 9tock :5change
C99:D, which is called 99:*?-<, also considered to be a representative of )hinese 9tock
7arket, went up b# ?<-H .
1owever, this does not mean that )hinese market has offered a superior return in the long
term. But later, the market turned bearish as government had halted the privatisation
programme.But later, as the government again pushed the reform programmes in
companies, investorsG interest returned to the market.
0articularl#, after the governmentGs recent decision to divest a part of its share holding in
banks has helped the investorsG confidence in the market. Recentl#, (ndustrial and
)ommercial Bank of )hina raised A;?.2 billion through an initial public offerings * the
54
biggest ever in the histor# of capital market.
(ndian stock market has continued its bull run for the fourth #ear since ;<<@. 'he B9:
@<*share inde5 went up b# over 4;H per annum compounded annuall#. :ver# #ear since
;<<@, the sense5 has been making records b# touching new highs. % senior merchant
banker said the (ndian market would have touched higher levels had the 7anmohan
9ingh government not halted the reforms in the public sector companies.
9hares of oil 09Es and public sector banks, e5cept that of 9tate Bank of (ndia, did not
perform. "hile the sense5 went up b# around 4,H, B9: inde5 for public sector
companies improved b# onl# ?;H in ;<<6. Because of the continued bull*run, 7*cap of
B9: has crossed A-<< billion mark. 'he market cap of )hinese market has gone ahead of
(ndiaGs because of its bull*run in the last two months when the 99:*?-< stock inde5 went
up b# around @5H.
%ccording to one estimate, the market cap of all the stocks uoting at 99: is over A one
trillion. 'ill some time back, market cap of 99: was less than that of B9:. (n case of
Bra+ilian and Russian markets, oil price pla#s an important role. 'he Russian 'rading
9#stem inde5 closed at ?-5;.@2 as against ??;5.6< on the last trading #ear.
(n case of Bra+ilian market also, the commodit# prices pla# an important role. 'he most
prominent inde5 (bovespa, went up b# @<.@@H .
(n ;<<,, BR()*centric e5change traded funds C:'$sD were powerhouses. 9o far, ;<<- is
telling a different stor#. 'he C("ym&reLBNY BRIC F$n% 6EEB7 has seen challenges in
some of its four countries * Bra+il, Russia, (ndia and )hina. $rom its all*time high, itGs
down ?2H, rep&r#s G"ry G&r%&n '&r ETF Exper#, and the gains upward of 65H in
;<<, feel like a memor#. Jear*to*date, the fund is down ?<.,H.
55
'ake heart, though& itGs still above its long*term trend line C;<<*da# moving averageD.
.ordon feels that the fund is still attractive, though& it has a low price and allows
investors access to all four emerging markets without being overweight in an# single
countr# or having to purchase four separate :'$s. (t takes the guesswork out of tr#ing to
pinpoint which emerging econom# is going to perform.
Mutual Funds to Invest in Brazil, Russia, India, China
[BRIC]
Bra+il, Russia, (ndia and )hina are the dominant emerging countries in the world, and
as a whole, the future growth of the world economy depends on these countries
continuing on their growth path #eedless to add, mutual funds, hedge funds, $T%s,
indexes, future, options and a host of other investing instruments have now
mushroomed to ta"e advantage of the rapid growth in these economies &any
56
companies that operate in these countries have listed their stoc"s in the #ew 'or"
(toc" $xchange as well, in search of a wider pool of investors and investment
dollars
'he average investor can take the path of investing in individual securities, but this limits
the number of companies one can safel# and easil# invest in. (t is far better to put mone#
into actual mutual funds that speciali+e in emerging economies with a specific focus on
the BR() nations of Bra+il, Russia, (ndia and )hina.
"all 9treet =ournal recentl# reported that $ranklin 'empleton (nvestments, 19B) %sset
7anagement, /eutsche %sset 7anagement and 9chroders (nvestment 7anagement are
among the fund companies that recentl# began offering BR() funds to investors in
:urope and %sia, and to E.9. high*net*worth individuals. >ikko %sset 7anagement has
launched a BR() fund in =apan.
%s #ou ma# note, these funds are not available to the average investor in the E9 * but if
#ou are a high net*worth individual then #ou can take advantage of these funds. 'here are
other options however, such as the %merican )entur# :merging 7arkets and 7anagers
:merging 7arket :uit# that invest in all of the BR() nations as well as other emerging
economies.
%nother method to invest is to simpl# bu# the :'$s that track the stock market inde5es in
these countries. $or e5ample #ou could purchase the 79)( Bra+il (nde5 fund C:"PD,
and the 79)( (ndia :'$, or the upcoming 7arket Fectors Russia :'$ Cproduced b# Fan
:ckD, and the 79)( )hina C1O/D or ver# broadl#, simpl# the 79)( :merging 7arkets
(nde5 :'$ C::7D. %lso, take a closer look at all the closed funds that operate in these
countries. $unds such as (ndia $und, (ndia .rowth $und, )hina $und, .reater )hina
$und, Bra+il $und and Bra+il :uit# $und, and 'empleton Russia $und will give #ou the
e5posure and diversification #ou need.
8ast but not the least is funds that are based in those countries * local companies that
primaril# cater to the domestic population. 'here are several ver# savv# fund managers
that operate in each of these countries, and who are intimatel# familiar with the local
conditions and now have developed a reasonabl# strong track record. >ot all of them
have facilities to accept and disburse funds abroad, but either directl#, or through banking
institutions, #ou should be able to access these funds. %lternativel#, #our broker should
5,
be able to place orders in those countries directl# and give #ou access to not onl# these
mutual funds, but to a large range of individual companies in these countries.
)s with any asset allocation methodology, ma"e sure that investments in the
BRIC countries ma"e up a fixed, small percentage of your overall portfolio &any of
these nations are experiencing serious, sustained growth for the first time in many
years - and are yet to face all the usual obstacles of business cycles, social moods
that may swing from pro-business to anti-business, protectionism and currency
upheavals *hile the returns are wonderful, always ta"e some money off the table
each time you ma"e a serious profit in any of these investments )s mentioned
above, event ris"s are above average in these economies and countries
1app# investing in the BR() countriesX
$merging mar"ets may be +high-ris", high-octane stuff,, says -ustin &odray of Bestinvest in
The Independent on (unday, but those who have been brave enough to invest in funds
covering Brazil, Russia, India and China .Bric funds/ have seen +eye-popping, returns, says
Craig 0armin in The *all (treet -ournal
In the five months since launch, the Te!leton Bric fund has returned 1234 for investors,
while the "#a Talents Bric$ .the 5"6 stands for (outh 0orea/ has risen by a third over the
past 17 months
That compares to a measly 284 return over the same period from the global emerging
mar"ets sector +$ven the star managers in this sector couldn6t "eep up with the Brics,, says
Tim (harp in The Independent on (unday
SECTI %& I ' ( B R I C F )&*S + F R %M E , - %R T T %
I &T E R &". C %&S )M- T I %&
9ne of the bedroc"s of the expansion in emerging mar"ets has been exports Russia and Brazil
have benefited from the price of oil and other commodities being pushed up by China6s and
India6s demand for raw materials, while *esterners have snapped up China6s cheap
manufactured goods &any commentators fear, understandably, that this ma"es them
vulnerable to a slowdown, or even recession, in the :( economy ; something that seems
more and more li"ely to materialise in the year ahead
5-
But there6s more to the Bric story than cheap goods )s their economies have developed, the
countries have become increasingly self-reliant The emergence of a middle class in each
country is feeding a steady rise in internal consumption *ith retail and financial services
booming as a result, there are signs that the Brics are now better placed than in the past to
weather a :( downturn
)nd investment ban" <oldman (achs .whose head of global economic research, -im 96#eill,
initially coined the term Bric/ certainly sees no slac"ening of growth in the near future ; the
:( ban" has pencilled in average <=> growth of ?@4 for the Brics during both 7228 and
722? Indeed, 96#eill believes the Brics could +become bigger than the <3 by 72A@, Be thin"s
China represents particularly good value and that this year6s stoc"mar"et rally +could be the
start of a bull mar"et, lasting five years or more, says the %T
Schroder "nternational Selection 'und
B"# (Bra)il* ussia* "ndia* #hina+
"n$est%ent ,b-ecti$e and Policy
'o provide capital growth primaril# through investment in euit# securities of Bra+ilian,
Russian, (ndian and )hinese companies.
PERFORMANCE ANALYSIS
52
Per'&rm"ne
in M
2 m&n#+ 9 m&n#+ YTD 2 Ye"r = Ye"r Sine
L"$n+
F$n% -2;1;8 -2?1;2 -2;1;8 9;1;8 - 24;1=8
Ben+m"r/ -2=1== -2?133 -2=1;9 98124 - 29=12=
6<
Fin"ni"( R"#i&s
0MBook Falue @.,? @.5;
0M)ash :arning ?@.@6 ?;.@4
0M: Ratio ?-.-5 ?-.-5
0redicated 0M: Ratio ?5.4, ?5.4?
RI: ?2.@< ?2.,,
/ividend 0a#out Ratio ;-.?; ;6.-@
@ Jear :arning .rowth H @?.2, @;.6,
6?
Lis# &' BRIC FUNDS
'empleton BR() $und * B# $ranklin 'empleton (nvestments
19B) BR() $reest#le $und * B# 19B) %sset 7anagement
%llian+ R)7 BR() 9tars $und * B# %llian+
db Benefit BR() * B# /eutsche %sset 7anagement
9)1RI/:R BR() $E>/ * B# 9chroders (nvestment 7anagement
/"9 BR() 0lus $und * B# /eutsche %sset 7anagement C%siaD8td
>(OO BR()s :uit# $und * B# >ikko %sset 7anagement =apan
O B R I C F )&*S + R I S / S " &* R E 0" R *S
6;
9f course, there are ris"s in investing in emerging mar"ets >olitical interference, corruption
and bureaucracy are a fact of life in all four countries But there is comfort in the fact that
valuations remain attractive +Brazil is on nine times 7228 earnings and China and Russia on
11-17 times,, -ulian &ayo, investment director of Charlemagne Capital, tells the %T
%or those who are interested in buying into the Bric, most financial advisers rec"on emerging
mar"ets should ma"e up no more than 124 of a portfolio The "#a Talents Bric$ is the fund
with the biggest exposure to China, at around AC4
BR() $unds are volatile and carr# a higher risk both in terms of market and currenc#
volatilit# which ma# result in dramatic fluctuations from time to time. Risks might also
include dealing difficulties, settlement and custod# practices and the market for some of
the securities ma# be less liuid. (nvestments in emerging markets include investment in
Russia. Jou should be aware that although the Russian Registrar )ompanies, that provide
share registration services to issuers of Russian securities, are appropriatel# licensed in
Russia, the# ma# not be subject to the same stringent controls, as in other, more
developed countries. 'his ma# mean that investors ma# not secure good title to the
Russian securities held b# the local /epositar#. 1ence, because of the potential for even
greater volatilit# in such markets, there is a conseuentl# greater risk of #ou not receiving
back allMor an# of #our investment allocated to this market. 'he $und will hold t#picall#
around 6< stocks. 8ower diversification and active stock selection can result in greater
than average investment in individual countries, companies or market sectors. 9uch
concentration can give rise to more risk than where investments are spread over a larger
number of countries, companies or market sectors. "hilst this ma# increase the potential
gains, this concentration of e5posure and lack of diversification ma# also substantiall#
increase the risk of loss in the $und. 0ast performance is no guide to future performance
and the value of an investment and the income from it can fall as well as rise.
BRIC &$n#riesN &mp"niesN &p#imis# '&r 4<<:
6@
'he manufacturing companies of the group of countries known as Bric CBra+il, Russia,
(ndia, and )hinaD are filled with optimism in relation to the business perspectives for the
ne5t ?; months, notwithstanding the moment of strong crisis in the %merican econom#.
%ccording to the surve# of the O07. (nternational consulting compan#, the Bra+ilian
companies are more confident regarding the level of business activit# this #ear * ,,.5H
believe it will increase and ?.;H that it will reduce. In the average of the Bric, ,<H
foresee an increase of the level of activit#, whereas 5.2H believe in the fall. O07. has
surve#ed ?.- thousand companies in the four countries. 'he Bra+ilian companies are also
those which show the greatest optimism regarding the level of orders and emplo#ment in
;<<-. %ccording to the surve#, ,6.@H e5pect an increase in the number of orders this
#ear, while <.2H believes the number of orders will decrease. $rom the surve#ed
Bra+ilian companies, 54.;H plan on hiring more emplo#ees, a percentage well above that
from )hina, where @?H of the companies intend to increase the number of emplo#ees
this #ear. 'he manufacturing sector of the four countries is also optimist in relation to the
perspective of revenues for the ne5t ?; months& ,?.?H of the companies e5pect growth.
'he belief in the gaining of new customers and new orders is the main factor that leads
the companies of the four countries to bet on the increase of the revenues, followed b#
the perspective of launching new products and innovations, and and to bet on the increase
of efficienc# and management of costs. 'he Russian companies are the most optimist
ones C-?HD, followed b# the Bra+ilian ones, with ,4.2H.
ORGANI IATI ONS TO TARGET BRI C
COUNTRI ES O
%ccording to a surve# conducted b# 0ricewaterhouse)oopers, a EO*based professional
services firm, organi+ations outsourcing to emerging markets, such as Bra+il, Russia,
(ndia, and )hina CBR()D, are not focusing onl# on low*cost benefits of such countriesN
rather, a majorit# of them perceive such countries as a huge market for their products and
64
services. %bout 5< percent of the organi+ations revealed that low*cost is the reason for
conducting business in BR() countries, while about ,5 percent revealed that access to
new customers and markets is the major reason.
%bout -< percent of organi+ations surve#ed agreed that the# will sell their products in
BR() countries. %bout 6, percent of e5ecutives interviewed revealed that globali+ation is
helpful as this will provide them an option of entering into markets of BR() countriesN
onl# ?; percent of the e5ecutives interviewed revealed that globali+ation has negative
impacts on their organi+ations.
% majorit# of the e5ecutives plan to sell their products in )hina, which has a huge
population. %bout -< percent of the organi+ations are implementing strategies to target
the )hinese market, while about 55 percent plans to do so in the ne5t few #ears. %bout 64
percent of the organi+ations agreed that (ndia offers Tsignificant market opportunities3,
while less than 5< percent agreed for it in the Bra+ilian and Russian markets
B$((is+ &n BRICs
$irst, for the first time in recent memor#, BR()s are growing not b# borrowing, but b#
investing. )hina has the worldGs highest savings rate. Russia is sitting on huge foreign
currenc# reserves, thanks to windfalls from oil profits. :ven freewheeling Bra+il is
showing heretofore unseen discipline b# running a fiscal surplus.
9econd, soaring commodit# prices have put more mone# in BR()s3 pockets than ever
before. 'hat means much less danger of a financial meltdown like the ones Bra+il and
Russia had the ?2-<s and ?22<s.
65
$inall#, higher credit ratings mean that BR()s toda# can issue debts in their own
currencies. 'he resultL 7uch more stable economic e5pansion and financing of
investment that depends on the whims of foreign investors.
BRIC &$n#ries #& in#ensi'y &&per"#i&n
Rising economies Brasil, Russia, (ndia and )hina have decided to graduall# intensif#
cooperation beginning with consultations at the ambassadorial level and then moving on
to political level.
)onsultations will focus on issues of mutual interest in the international arena as also
those relating to trade, development and financial s#stem.'he decision was taken during a
ministerial meeting of the four countries on 7onda# on the sidelines of the ongoing
Enited >ations .eneral %ssembl# session.
66
:5ternal %ffairs 7inister 0ranab 7ukherjee, who is leading the (ndian delegation at the
E>.%, had a series of bilateral meetings with his counterparts during which
international issues as also those of mutual interest came up.
/uring a meting with %fghan $oreign 7inister Rangin 9apanta, 7ukherjee reiterated
(ndiaGs firm commitment to assist %fghanistan in its efforts to rebuild its econom#,
especiall# in infrastructure, and to support capacit# building programmes aimed at
R%fghan*isation.R
'he two foreign ministers also reviewed Re5cellentR bilateral relations and discussed the
securit# situation in %fghanistan. 'he# agreed that it posed a Rsignificant challenge,R
officials said.Besides the %fghan foreign minister, 7ukherjee also had in*depth
discussions on issues of mutual interest with the foreign ministers of %lgeria, 9ingapore,
)uba, 9lovakia, the E%:, 9lovenia and )anada. /uring their discussions, 7ukherjee and
%lgerian $oreign 7inister 7ourad 7edelci agreed on the need to e5pand bilateral
cooperation, focusing in particular on the economic relationship.
%s representatives of nations that had suffered greatl# from terrorism, there is a close
similarit# of views between the ministers on the threat posed b# this menace, officials
said./uring a half*an*hour meeting, 7ukherjee and 9ingaporean $oreign 7inister
.eorge Jeo reviewed the strong bilateral ties between the two countries in the political,
economic, trade, cultural, defense and scientific fields.
(n his meeting with )ubaGs $oreign 7inister $elipe 0ere+ Roue, 7ukherjee sought and
received a briefing on the health of )uban leader $idel )astro, officials said but gave no
further details.
'he two ministers noted that the e5cellent bilateral relationship had developed over the
6,
#ears with contacts at the highest levels, and the# also recalled that 0rime 7inister
7anmohan 9ingh had called on )astro in 9eptember ;<<6, on the sidelines of the summit
meeting of the >on*%ligned 7ovement in 1avana.
DATA COLLECTION
SECONDARY DATA
My s#$%y is ,"se% &n(y &n se&n%"ry %"#" &((e#e% 'r&m m$(#i0"ri"#e .e,si#es 1 A
("r!e n$m,er &' &n(ine > p$,(is+e% rep&r#s +"0e ,een s#$%ie% #& "n"(yDe #+e !r&.#+
'&re"s#e &' BRIC &$n#ries1 As n"#$re &' my s#$%y &n(y nee%s se&n%"ry %"#"
.+i+ is "s '&((&.sJ
6-
D"#" per#"inin! #& '&rei!n in0es#men# in In%i" +"s ,een "H$ire 'r&m #+e si#e
&'51e#
S&me '"#s > 'i!$res 'r&m -&$rn"(s* ,&&/s* ne.sp"pers "n% m"!"Dines (i/e
De"( m"/er* B$siness W&r(%* E&n&mi Times* Times &' In%i"* Gin%$s#"n
Times*Fin"ni"( Express* B$siness T&%"y* B$siness Line e#1
C&(&ss"( "m&$n# &' /n&.(e%!e "'#er ."#+in! #+e in#er0ie. &' Di(i!en#
Pers&n"(i#ies &n CNBCTA2:* NDTA* "n% Ge"%(ine T&%"y511 e#
In'&rm"#i&n !"#+ers 'r&m /ey pers&nne( in 'in"ne > A&$n# %ep"r#men# &'
In%i",$((s * > %is$ssi&n .i#+ Represen#"#i0e M"n"!er > Br"n+ M"n"!er
&' #+e &mp"ny
FINDING > ANALYSIS
Bra+il, Russia, (ndia and )hina as economies, would together overtake the
economies of the .*6 countries in the world b# ;<4<.
B# ;<;5 the# could account for over half the si+e of the .6 * the# are currentl#
worth less than ?5H. If the current .6, onl# the E9 and =apan ma# be among the
si5 largest economies in E9A terms in ;<5<
62
'hese fast e5panding BR() economies are e5pected to represent 44H of world
./0 b# ;<5<.
.rowth of BR() economies boosts business worldwide 6 are the building block
of the whole globe
)hina and (ndia, will become dominant global suppliers of manufactured goods
and services while Bra+il and Russia would become similarl# dominant as
suppliers of raw materials Cenerg#, oil 6 mineral resources.D BR() is now also
used as a more generic marketing term to refer to these four emerging economies.
BR() countries represent 4;H of the worldGs population
1 )hinaGs econom# will surpass .erman# in the ne5t few #ears, =apan b# ;<?5,
and the E.9. b# ;<4?.
(ndiaGs growth rate will be the highest ** not )hinaGs ** and it will overtake =apan
Ctoda# the worldGs second largest econom#D b# ;<@;.
BR()s3 currencies could appreciate b# @<<H over the ne5t 5< #ears, providing a
big tailwind for investors in BR() assets.
'aken together, the BR()s could be larger than the E.9. and the developed
economies of :urope within 4< #ears.
Iver the ne5t two decades, BR()s will bring another ;<< million people with
incomes above A?5,<<< into the worldGs econom#. 'hatGs eual to the combined
populations of .erman#, $rance and the E.O.

RECOMMENDATION
,<
?. .overnment should set a minimum limit as well as ma5imum limit, within
which $(( invest in (ndia , in order to avoid volatilit# in (ndian stock market
C sense5 6 nift#D
;. .overnment should allow more than ?<H limit in 8(), Bank , 7utual
$unds,0ension $und 6 other small companies to invest in (ndia
@. (mplementation of act is must 6 imperative in order to eschew from seasonal
variation , Rules 6 regulation are made , but follow up is not there
4. .enerate new opportunities to allow more pla#ers from multihued countries 6
in this wa# dwindle down the risk of volatilit#
BIBLIOGRAPGY
+##pJLLpi/ey1&m
+##pJLL reuters.com
+##pJLL businessmonitor.com
+##pJLL www.cia.gov
+##pJLL Len1.i/ipe%i"1&r!L.i/iLBRIC
,?
+##pJLL ...1in%i"re#"i(in!1&mLemer!in!-m"r/e#s1"sp
+##pJLL...1,$siness-s#"n%"r%1&m
+##pJLL +##pJLL...1m"r/e#."#+1&m
+##pJLL !reen(i!+#"%0is&r1&mL!(",(&!
+##pJLL
+##pJLL
...1
+##pJL
+##pJLL
,;
"&&E,)RES
TABLES
"ND"A #."NA BA/"L !SS"A
Population 012 billion 013 billion 045 %illion 030 %illion
Population
growth rate
016567 516567 015587 9513837
Literacy 657 45147 88167* 44137
Population
below po$erty
line:
287 47 2:7 0:7
;DP rate 4137 051:7 37 <7
,@
;DP
(purchasing
power parity+:
=31063 trillion =00 trillion =0188 trillion =014:6 trillion
#urrency (code+: "ndian rupee
("N+
yuan (#N>+? real (BL+ ussian ruble
(!+
Exchange rates: @4135 per dollar <1: per dollar 018 per dollar 2313 per dollar
'orex eser$e = 2:5 billion =013 trillion =068 Billion1 =36@1: billion
Pri$ate eAuity =21:0 billion =213 billion
CGARTES
,4
,5
./0 contribution
India China
Brazil
Russia
Service
56H 4<H 66H 56H
,6
industry:
;2H 42H ;<H 4<H
Agriculture ?5H ??H ?4H 4H
;DP contribution
5
!"

5
#$
!$
#" !"
%5
%%
%!
!
"&
#"&
!"&
"&
'"&
%""&
India China Brazil Russia
#ountries
(griculture
industr)*
Service
,,
,-
,2
-<
In'("#i&n in BRICCs
"nflation "n B"# 2556
0514
:1<
3
016
5
2
3
6
8
05
02
ussia Bra)il "ndia #hina
#ountries
7
-?
C&$n#ries In'("#i&n in M
R$ssi" 2<1?
Br"Di( =18
In%i" ;
C+in" 213
-;
BRIC- N&min"( B$%!e# B"("ne 4<<3
B"# 9No%inal Budget Balance 2556
<1:
9@1@
9<1<
901@
905
98
96
93
92
5
2
3
6
8
05
ussia #hina Bra)il "ndia
#ountries
7

o
f

;
D
P
Series%
-@
Y
BRIC-T&#"( G&0ernmen# Re0en$e 4<<3
B"#9Botal ;o$t1e$enue 2556
@<18
@518
0<1@
41<
5
:
05
0:
25
2:
@5
@:
35
Bra)il ussia #hina "ndia
#ountries
7

o
f

;
D
P
Series%
-4
BRIC- P$,(i B$%!e# T& GDP R"#i& 4<<3
B"#9 Public Budget Bo ;DP atio 2556
<314
6<
0<14
0218
5
05
25
@5
35
:5
65
<5
85
Bra)il "ndia #hina ussia
#ountries
7Series%
B"# (Bra)il* ussia* "ndia*
-5
In%i" Dre"min! .i#+ BRICsJ T+e P"#+ #& 4<=<
In 4<<9 G&(%m"n S"+s 6" (e"%in! !(&,"( in0es#men# m"n"!emen# 'irm7 "me $p
.i#+ " rese"r+ rep&r# "((e% BDre"min! .i#+ BRICsJ T+e P"#+ #& 4<=<P1
A&r%in! #& Wi/ipe%i" BRIC 6Br"Di(* R$ssi"* In%i"* "n% C+in"7 is " &"(i#i&n &'
re!i&n"( "n% s$perp&.ers rep&r#e%(y pr&p&se% ,y R$ssi"n Presi%en# A("%imir
P$#in1

-6
T+e BRIC rese"r+ 'in%in!sJ
I' #+in!s !& ri!+#* #+e 'irmNs e&n&mis#s "r!$e% #+"#* !i0en s&$n% p&(i#i"( %eisi&n-
m"/in! "n% !&&% ($/* #+e BRIC e&n&mies #&!e#+er &$(% ,e&me ("r!er #+"n
#+&se &' #+e .&r(%Ns six m&s# %e0e(&pe% &$n#ries in (ess #+"n ;< ye"rs1 i1e BRIC
e&n&mies &' Br"Di(* R$ssi"* In%i" "n% C+in" #&!e#+er .&$(% ,e ("r!er #+"n G3 6G8
ex($%in! C"n"%"7 in USD in (ess #+"n ;< ye"rs1 O' #+e $rren# G3* &n(y #+e US "n%
F"p"n m"y ,e "m&n! #+e six ("r!es# e&n&mies in US %&(("r #erms in 4<=<
-,
--
-2
2<
2?
2;
:merging markets have weathered the E.9. credit market calamit# ver# well and the bull
run will continue in ;<<-. 'he economic decoupling between emerging economies and
the E.9. is attributable to underl#ing fundamentals and is therefore sustainable
2@
24
'oda#, emerging markets BR() countries sit atop a current account surplus in e5cess of
A,<<*billion, and it is the industriali+ed ., who are in debt, b# the same amount. 8onger
term surpluses in e5cess of A@*trillion are to be found on the balance sheets of mostl# the
BR() countries toda# in the form of $oreign :5change surpluses, and trade surpluses.
)hina alone now nurses a trade and fore5 surplus nearing E9A?.5*tillion. Russia, has
managed to build up reserves of E9A45<*billion as well as 0utin3s E9A?5<*billion
Tcontigenc#3 fund, set aside so that it ma# sidestep an# kind of financial shock. (ndia has
amassed a fore5 surplus of around E9A;,5*billion. Bra+il3s fore5 reserves now stand at
E9A?,-*billion.
25
26
BR() countries have been financing the debt, and driving the growth of ., countries for
the last 5*, #ears. 'oda#, around 6<*,<H of emerging markets sovereign debt is
investment grade rated and all ?;< companies that form the ke# 79)( :merging 7arkets
(nde5 have %/R listings.
2,
2-
22
?<<
CONCLUSION
)hina has emerged as the worlds manufacturing hub, while (ndia has come on ver#
strong as its counterpart hub in services, both providing "estern firms access to
ine5pensive educated and *or* highl#*skilled labour. Russia, under 0utin, has successfull#
emerged as a highl# profitable energ# and raw materials producer, second in oil and gas
reserves to 9audi %rabia. Bra+il has changed the regional balance in the %mericas b#
turning itself into the winds of east*west trade in hard and soft commodities and using its
strength to bolster its new economic clout in relation to >orth %merica
?<?